Input Tax Credit

[Harsh Jindal]

A Manufacturing firm having head office in Delhi and manufacturing plant in Jaipur. HO is registered as input service tax distributor. Jaipur plant has separate excise duty and service tax registeration.

Now Jaipur plant took some services from one of Delhi's service vendor. Vendor has charged service tax on bill. Service was provided in Jaipur plant. But the bill is in name of our head office at Delhi.

So please tell me who is elligible to take credit? - Wether Jaipur (where service was given) or it is Delhi (in whose name bill was raised).

[YAGAY and SUN]

Under Rule 7 of the Cenvat Credit Rule, if the services which are being provided to HO are fully attributable at Units which are manufactuing dutiable finished goods then, full allocation of Tax can be made to such unit.

 

[Harsh Jindal]

Can HO allocate the credit to Jaipur unit?

And Can HO utilize the credit for his taxability?

[YAGAY and SUN]

Yes, HO can allocate this service tax amount to Unit but after making payment to the service provider.  You would have to issue an Invoice for such allocation to the unit.  HO will not avail the Credit as credit needs to be transferred from HO to Unit.

AI Summary

Input service credit allocation: head office may transfer service tax credit to the manufacturing unit after payment and invoicing.
When a head office registered as an Input Service Distributor receives a billed service that is fully attributable to a manufacturing unit, the head office may allocate the service tax credit to that unit provided it has paid the service provider and issues an invoice or document effecting the allocation; the head office must transfer the credit to the unit and cannot retain the credit for its own utilization.