Cenvat credit in trading business

[yash banthia]

We are into a propper retail chain business and paying huge service tax on rent.With the normal trading activity we are also providing business aux. services and other sho in shop rent. Are we eligible to claim service tax credit and if yes what is the general norms followed in this regard.

AI Summary

Retail chain advised on Cenvat credit eligibility; trading as exempted service affects claims. Rule 6 compliance required. A retail chain business inquired about claiming service tax credit while engaging in both trading and providing business auxiliary services. It was clarified that trading is considered an exempted service, impacting Cenvat credit eligibility. According to Rule 6 of the Cenvat Credit Rules, 2004, the business must choose between maintaining separate accounts for taxable and exempted services, paying 6% of the value of exempted services monthly, or reversing proportionate credit monthly. The third option is recommended, and any chosen method must be communicated to authorities and cannot be changed within the financial year.