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TMI BlogRule 6(3)(ii) of Cenvat Credit Rules, 2004 read with Notification No 1/2006-STX X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 6(3)(ii) of Cenvat Credit Rules, 2004 read with Notification No 1/2006-ST X X X X Extracts X X X X X X X X Extracts X X X X ..... services on which no service tax is leviable under section 66 of the Finance Act and taxable services whose part of value is exempted on the condition that no credit of inputs and input services, used for providing such taxable service, shall be taken. Rule 6(3) of Cenvat Credit Rule, 2004 states that the manufacturer of goods or the provider of output service, opting not to maintain separate acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts, shall follow any one of the following options, as applicable to him, namely:- (i) pay an amount equal to five per cent. of value of the exempted goods and exempted services; or (ii) pay an amount as determined under sub-rule (3A); or ****** Provided further that if any part of the value of a taxable service has been exempted on the condition that no CENVAT credit of inputs and input ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services, used for providing such taxable service, shall be taken then the amount specified in clause (i) shall be five per cent. of the value so exempted."; Sir, considering the above provisions, there is a tour operator who operates a packaged tour and avails the benefit of Notification No 1/2006-ST. Hypothetical figures in this regard is as under: Output service Amount (Rs) Value of taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service under tour operator (Packaged Tour) 100000 Abatement (exempt as per Rule 2(e) of CCR ) read with Notification No 1/2006-ST 75000 Taxable Value 25000 Tax @ 10.3% 2575 Now, for providing output service, he avails input service on which service tax paid is as under: Details of Input Service Value Rate of input service tax input service Tax Paid Suppose, 20% of the amount paid to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GSRTC who charges service tax @ 4.12% 20000 4.12% 824 Suppose 40% amount paid to Hotels who charge service tax @ 5.15% 40000 5.15% 2060 Total Input Tax Paid 2884 Now sir, if we follow the provision of Rule 6(3)(ii) of Cenvat Credit Rule, 2004 then proportionate credit is admissible if the assessee does not maintain separate books of account for taxable and exempted service. Exempted se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice includes taxable services whose part of value is exempted on the condition that no credit of inputs and input services, used for providing such taxable service, shall be taken. Thus, can it be interpretated that the assessee is providing taxable service of Rs 25,000 and exempted service of Rs 75,000. Pursuant to that, can credit equal to 25% of Rs 2884 be taken (i.e., of Rs 721) and balanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount of Rs 1854/- (Rs 2575-Rs 721) be paid in cash. Sir, is the above interpretation correct? Reply By tushar garg: The Reply: To begin with he will not be eligible for CENVAT as he is availing the benefit Nofn.1/2006-ST,. Now to clear your doubt to some extent let me give you one example : Mr. A is rendering architect service worth Rs. 1,00,000 and construction services being classified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under commercial construction worth Rs. 2,00,000 on which he deposited its tax liability after claiming abatement of 67% under Nofn.1/2006-ST,) In order to provide these services, he availed the Rs. 600,000 worth of input services on which he paid 60,000 as service tax Now Mr. A is providing taxable as well as exempted services, it can take CENVAT credit according to rule 6(3) Taxable Service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Architect Services : 1,00,000 Input Service Tax input services(600000*10%) : 60,000 Total Turnover(taxable & exempted) Architect Services + Commercial construction : 1,00,000 + 2,00,000 CENVAT Credit = input service tax * taxable services / total turnover =60,000*1,00,000/3,00,000 = 20,000 Exempted services means.................whose part of value is exempted on the condition that no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit shall be taken i.e. services in respect of which benefit of not. 1/2006 is taken. Thus whole amount of Rs. 2,00,000 will be considered as exempted and not 67% of 2,00,000 Reply By ROHAN THAKKAR: The Reply: Fine Sir.. Thanks a Lot. With Respect and Regards, Rohan Thakkar Reply By raj kumar shukla: The Reply: kindly check up with Budget Bulletin 2012 issued by cbec. In page 49 para1.14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . it has been reported that in case of exempted services(that are partially taxed with no facility of cenvat credit) this amount shall be 5% of the exempted value of the service.Thus if the exemption on a certain service is 60%,the amount required to be paid shall be 3%(60*5%) of the full value of the service. Kindly check up again. regards r k shukla Reply By raj kumar shukla: The Reply: it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s budget bulletin 2011 and not 2012. X X X X Extracts X X X X X X X X Extracts X X X X
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