Service Tax Balance

[MITSUI PRIME ADVANCED]

Dear Sir,

I come to know that our unit is manufacturing unit at alwar and we have already registered under ISD at gurgaon office , and we have only one service provider in the category of Management Service under sub Section 105 of Finance Act 1994. We have properly submitted our Excise return and Service Tax return, in the case of Excise Return ER-1 show service tax Credit Balance balance and when we have filied our service tax return show properly Service Tax Credit (CENVAT ) Balance both area same. who is already show in Excise Return at Service tax coloum.

in this case i am right or wrong. Or any rule or section please advice .

Regards

Arjun SAchdeva

[Surender Gupta]

Since you are engaged inn manufacturing activity, you can avail cenvat credit of all rather services used in or in relation to manufacturing activity. Mere registration as a ISD would not entitle you to take the credit. 

However if you are not engaged into any other activity, it may be presumed that management services are in relation to manufacturing activity. The onus is on you to discharge this burden.

[MITSUI PRIME ADVANCED]

Dear Sir,

 

My question was both balance should be same. in borth return i.e. Service tax and Excise return..

 

Regards

Arjun Sachdeva

[dipsang vadhel]

I suppose you are registered for sinle premises in respect of Service Tax & Excise.Further, you have also registered your Gurgaon office as ISD.

 However,since you are registered for ISD at gurgaon office as well, you should also show necessary details of ISD as well viz (i) CENVAT recived for distribution (ii) CENVAT distributed by ISD to units(!!) CENVAT inadmissible (II) CENVAT distributed (II) CENVAT balance pending for distribution. You may also refer to amended (w.e.f.01.04.2012) Rule 7 of CCR for manner in which credit should be distributed by ISD. This is in addition to CENVAT details of corncerned unit.

However, your query is not clear as to whether you are service provider or Manufacturer. If you are only manufacturer and CENVAt credit relates to goods being manufactured by you and you are not utilizing CENVAT credit for payment of service( which you are  required to pay in cash e.eg. Reverse charge mechanism) tax, you can show balance in Excise Return & not show same balance in Service Tax return as it creates confusion at the time of scrutiny of service Tax return.Since you are disclosing the CENVAt details in Excise return and CENVAt has nothing to do with Service Tax in as much that you are not availing any CENVAt credit in connection of output service Tax and also you are not utilizing any CEENVAT credit for payment of output service tax. Therefore, the entire CENVAt credit details can be omitted from service Tax return. The dept should not object this as this is reported in excise return.

However, if you are both service provider as well as manufacturer & paying both excise duty as wellas service Tax from CENVAT, you should disclose CENVAT details in both Service Tax as well as Excise return. In that case, Yes, CENVAT balance for corncerned unit in both Excise Return and Service Tax return should be same.

AI Summary

CENVAT credit reporting: reconcile ISD distributions and disclose credits across returns when credits fund both excise and service tax.
Whether the CENVAT credit balance must match between Excise and Service Tax returns depends on activities and ISD use: manufacturers may report CENVAT in Excise returns and omit it from Service Tax returns if the credit is used only for manufacture and not to discharge service tax liabilities; if the taxpayer also provides taxable services or uses CENVAT for service tax, and if credits flow through an ISD, all ISD distribution details and the unit's CENVAT balance must be disclosed and reconciled across both returns.