cenvat credit

[S.C. WADHWA]

Dear experts,

we have been paying service tax on rental income being service provider.  We have invested some money through Port folio management services.  We are getting income in shape of dividend, interest, LTCG AND STCG.  Port folio management have been charging service tax on management fee.  Now our query is as under:-

 

Whether we are elligibal to get input tax credit of service tax paid on management fee and reduced our liability by adjusting the input credit.

 

S.C.WADHWA

 

[YAGAY andSUN]

Though there is no nexus in Input Services and Output services in your case, even then, you may avail the CENVAT credit since there is no one to one correlation required for availing the CENVAT credit in the case of Service Provider.

[rajkumar shukla]

once cenvat credit has been availed properly ,it can be used gaainst payment of service tax on ANY output service.

[CASeetharaman KC]

As per Rule 2(l) of Cenvat Credit Rules ,2004“input service” means any service, -

            (i) used by a provider of ²⁶[output service] for providing an output service; or

           From the above it seems that a nexus needs to be drawn between the input service and the output service for availment of CENVAT. The question is whether the items listed by you would form inputs.

AI Summary

Cenvat credit eligibility for portfolio management fees hinges on whether the management service qualifies as an input service. Whether service tax paid on portfolio management management fees qualifies as an input service for availing CENVAT credit and whether such credit can be adjusted against service tax on unrelated output services is contested: some practitioners assert no strict one-to-one nexus is required and that lawfully availed credit may be used against any output service liability, while Rule 2(l) suggests an input service must be shown to be used in providing the output service, creating a need to demonstrate nexus or use.