Cenvat under Sponsorship service

[Guest]

Dear Sir,

 

I want to know about some cenvat credit issue as follow, please guide me.

 

If Mr. X, a manufacturer, sponsor a event then service tax will be paid by Mr. X 100%,under reverse charge then can he take that service tax credit against excise on manufacturing.

 

Thanking you. 

[YAGAY andSUN]

If such sponsorship service amounts to sales promotions activity, advertisement then you may avail the CENVAT credit.

[CASeetharaman KC]

The credit can be taken only after the service tax payment has been made on the basis of the challan making the payment

[JAMES PG]

For taking credit based on the reverse charge mechanism, payment of both value of service as well as the Service Tax is a pre-condition 

[Guest]

How for a manufacturer a sponsorship service will be a input service ?

[JAMES PG]

Input service is defined in CCR as any service used by a manufacturer whether directly or indirectly in or in relation to the manufacture of final products and clearance of final products upto the place of removal and includes services like advertisement or sales promotion, market research etc . Without advertisement it is difficult to market a product and sponsorship is resorted to as a good means for advertisement and sales promotion by most manufacturers. Pl refer to Circular No 334/1/2010-TRU dated 26.2.10 wherein it is clarified that sponsorship is form of advertisement

[YAGAY andSUN]

Nice reply by 'James Sir'.

[Guest]

Thank u sir.......

[Rajagopalan Ranganathan]

Sir,

   If the sponseship of event is for promoting sales of the goods manufactured by the manufacturer, then he can take credit of service tax paid on such sponseship.

R. Ranganathan

AI Summary

Input service: sponsorship treated as advertisement permits CENVAT credit when service tax is paid with challan evidence. CENVAT credit for service tax paid on event sponsorship is available where the sponsorship qualifies as an input service-specifically advertisement or sales promotion used to promote the manufacturer's goods-and where service tax has been duly paid (including under reverse charge) with supporting evidence such as the challan.