We are liable to pay service tax under reverse charge for
Legal Services by Advocates,
Motor Car Hire Charges
Manpower Supply services
Service portion in a Work Contract Service
Import of services - Professional - Financial Advice Services
After paying the service tax under Reverse Charge. Shall we eligible to take Input Credit of the above service tax paid in our Output Services Like Commission Agent for goods supply, Recovery of Freight, Recovery of Addl Storage Charges
Pls give your Inputs on this.,
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As per defination under Rule Sec 2(l) (ii) of CENVAT credit Rules, 2004, credit of input services can be taken on all direct and indiect expenses relating to manufactureing legal fees, inward transportation, security charges, labour expenses and outward transportaion upto the palce of removal.
You may avail the CENAT credit as per the provisions of CENVAT credit Rules, 2004 as amended time to time. In the case of reverse charge mechanism, the challan would be the appropriate document to avail the CENVAT credit.
Cenvat credit eligibility is subject to the exclusion clauses in CCR. For example, motor car hire charges, Works contract related to Construction services, laying foundation or making structures of capital goods etc are not eligible for credit availment
In terms of Rule 2(l) of CCR, 2004 only services "used" for providing output service are eligible for credit. This concept read with Board's Letter F.No. 354/148/2009-TRU Dated 16-7-2009 (issued in the context of admissibilityof credit of tax paid u/s 66A under reverse charge), it should be understood that these services should be used for or should have nexus with the output services mentioned by you. Secondly, you have to take into consideration the exclusion categories like rent-a-cab, construction services services etc. Accordingly, from the info given, it seems that Motor car hire charges and any construction related services under works contract are not eligible at the very outset and eligiblity of other services depend on their nexus with the output service.