Service Tax credit on Advertisement

[RAM SHARMA]

Dear Experts,

We have paid foreign expenses for hire furniture and fixture in exebition like advertisement expenses. Can we take input credit on such amount.

Thanks

[YAGAY andSUN]

If the value of such exenses is included in the assessable value of your finished goods then you can avail the CENVAT credit.  Further, Advertisement or sales has specifically mentioned in the definition of the Input Services under the CENVAT credit Rules, 2004.  On the basis of challan, you can avail the CENVAT credit.

[CASeetharaman KC]

It seems from your question that the services are provided by a local company for hiring of furniture for an exhibition overseas then such payments would amount to advertisement expenses the service tax paid on which would be eligible for cenvat credit on the basis of invoices.

[Vijay kumar]

If the expenses are foreign expenses, perhaps u have paid the foreign service provider towards the expenses on hire furniture and advertisement. If the exhibition was held abroad, the question of payment of service tax by such foreign service provider or anybody does not arise (since service was in non-taxable territory) and consequently the availment of credit also does not arise. Thus, your question is not clear. Rather u r supposed to pay service tax as receiver of the service under section 68(2) r/w notification no 30/2012 and if it is an input service for your output service/finished goods in terms of Rule 2(l) of CCR, 2004, u may certainly avail credit on the strength of the challan on which u have paid the service tax.

[RAM SHARMA]

The expenses are foreign expenses, we have paid the foreign service provider towards the expenses on hire furniture and advertisement because having no office in india and the exhibition was held in abroad. Now i thik you will have batter understant my query.

[CASeetharaman KC]

If the expenses are paid abroad for services rendered abroad the question of incidence of service tax does not arise as the place of provision of service is outside india. Consequently availment of CENVAT credit also does not arise

[Vijay kumar]

If the exhibition is held abroad on a date after 1.7.2012, the question of service tax does not arise as in terms of Section 66B of the Finance Act, 1994 the levy is only on the services provided or agreed to be provided in the taxable territory. Accordingly, the question of input service credit also does not arise. However,  if the said event has taken place prior to 1.7.2012, in the absence of the said provision, service tax was chargeable on the receiver i.e. you under Business Exhibition SErvice, under reverse charge mechanism in terms Section 66A ibid, in force during the material period. The tax paid by you would be available as input service credit on the strength of the challan, provided the said service is an input service for you in terms of its definition under Rule 2(l) of CCR, 2004.

AI Summary

Service tax credit: not available for services provided abroad; available if tax was paid and service qualifies as input. CENVAT credit for foreign hire of furniture and advertisement depends on place of provision and incidence of tax: services rendered abroad do not attract service tax and thus do not qualify for credit; where tax has been paid (including under reverse charge) and the service meets the definition of an input service under the CENVAT Credit Rules, 2004, credit may be claimed on the strength of invoice or challan.