Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

DISPUTED INPUTS SERVICE CREDITS

Service Tax - By: - ashish chaudhary - Dated:- 20-8-2015 Last Replied Date:- 25-8-2015 - The concept of set off where an assessee adding value is able to set off the taxes on his purchases, is an important one which enables one to avoid the cascading effect of taxes and thereby control cost s. Under central excise, the concept of set off as provided for by Cenvat Credit Rules 2004 allows a manufacturer of dutiable goods to avail Cenvat credit of the duties of excise incurred on his inputs and ca .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

not only about credit of duties of excise on inputs and capital goods but also of service tax paid on input services, and intend to be beneficial in nature, what is really happening is that the credit, especially with regard to input services, are being questioned by department by construing the definition of input service rather narrowly. The courts have repeatedly held that the intention of cenvat credit rules is to avoid cascading effects and thus credit should be admissible on all the expens .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

h the decisions given by the courts most of which are invariably in favour of assessee. We have however not discussed the provision of Rule 6 of CCR 2004 as it would have to be discussed separately. Definition of input service: The definition of input service w.e.f. 1.7.2012 is as below: [(l) input service means any service, - (i) used by a provider of output service for providing an output service; or (ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufact .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

are registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal; but excludes - (A) service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as specified services) in so far as they are used for - (a) construction or execution of works contract of a building or a civil structure o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nufacturer of a motor vehicle in respect of a motor vehicle manufactured by such person; or (b) an insurance company in respect of a motor vehicle insured or reinsured by such person; or (C) such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he credit will not be available on the expenditure incurred for set up of the factory of manufacturer or premise of output service provider. Removal of word such as and services used in relation to business : These omission from the definition of input service was to counter the decision of Bombay High Court in case of Coca-Cola India Pvt Ltd, 2009 (8) TMI 50 - BOMBAY HIGH COURT and CCE, Nagpur Versus Ultratech Cement Ltd. 2010 (10) TMI 13 - BOMBAY HIGH COURT, in the aforesaid decision the honor .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ruti Suzuki Ltd. - 2009 (8) TMI 14 - SUPREME COURT. Issues under Cenvat Credit and case laws: Credit on outward transportation Credit on outward transportation of goods has been an area of constant litigation between department and taxpayers since last few years. The department had been maintaining all the while that the question of claiming the credit would arise only in respect of service tax paid on transportation upto place of removal. The important question was what is the place of removal? .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed in the Cenvat Credit Rules vide Notification No. 21/2014-CE (NT) which is same as per Central Excise Act. It has also been clarified vide circular Circular No. 988/12/2014-CX, dated 20-10-2014 that payment of transport, inclusion of transport charges in value , payment of insurance or who bears the risk are not the relevant considerations to ascertain the place of removal. The place where sale has taken place or when the property in goods passes from the seller to the buyer is the relevant co .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ere property in the goods is transferred so that the claim to cenvat credit is not questioned by department for want of documentary evidence. Also, the charges towards transportation must be integral part of price of goods as held in case of Chhattisgarh HC in case of Lafarge India Ltd 2014 (10) TMI 297 - CHHATTISGARH HIGH COURT. Further, it has been clarified vide circular No. 999/6/2015-CX, dated 28-2-2015 that in case of export, the place of removal shall be Port/ICD/CFS from where export is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

is eligible. Meanwhile, the definition of input service got amended w.e.f 1.4.2011 and excluded the services of outdoor catering from its definition when these services were primarily used for personal use or consumption of the employees. In light of the revised definition, it is likely that the department may not allow the credit on outdoor catering service. Also, in case of Bajaj Motors Ltd. 2015 (8) TMI 695 - CESTAT NEW DELHI credit has been rejected post 1.4.2011. But there is contrary view .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. Credit on employee insurance: Prior to 1.4.2011, these activities were considered to be in the nature of related to business and credit was allowed in case of Karnataka High Court in Commr. of C. Ex., Bangalore v. Stanzen Toyotetsu India (P) Ltd. - 2011 (4) TMI 201 - KARNATAKA HIGH COURT and in Commissioner of C. Ex., Bangalore v. Millipore India Pvt. Ltd. - 2011 (4) TMI 1122 - KARNATAKA HIGH COURT . However, after amendment of the definition, unless it falls in the means part of the definitio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

these natures could be discussed under following broad headings: Set up of factory, warehouse, office, premise of SP: Credit not admissible after omission of word set up and specific exclusion of construction/works contract for civil structure. Repair of existing premise: Credit could be admissible in the revised definition also as the repair has been specifically included in the inclusive part of the definition. Clarified by department vide Circular No. 943/4/2011-CX., dated 29-4-2011. Also hel .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ited, 2008 (1) TMI 96 - CESTAT BANGALORE credit of service tax paid on mobile phones and landline phones installed outside the factory in the residence of directors and company s officials were held to be allowed. However, since omission of the word activities related to business , the credit could be questioned unless it can be established that these have been used directly or indirectly in the manufacture of final products or for providing output service. Connection should be taken in the name .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

art and hence the credit on the same may not be admissible. Credit on CHA service and surveyor s service In case of export of goods, the place of removal is considered port/CFS/ICD from where the goods are shipped. Also clarified in circular No. 999/6/2015-CX. It has been held in the case of Rolex Rings P Ltd 2008 (2) TMI 770 - CESTAT, AHMEDABAD and Fourrts (I) Laboratories Pvt. Ltd 2009 (10) TMI 175 - CESTAT, CHENNAI that CHA and surveyor s services relate to export business, hence credit of du .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

for marketing and sale promotion as eligible. Post April 2011 the activities relating to business was dropped however the specific activity of sales promotion was continued to be included in the definition. Several decisions including commissioner Of Central Excise, Ludhiana Versus Ambika Overseas [ 2011 (7) TMI 980 - P&H HC] affirmed this position. Further the CBEC Circular 943/4/2011 dt 29.4.11issued in Sl. No 5 clarifies that inspite of the activities relating to business being omitted as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version