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TMI BlogCENVAT credit eligibility on KKC as a manufacturer (deemed Service provider i.e. Reverse change MachanismX X X X Extracts X X X X X X X X Extracts X X X X ..... CENVAT credit eligibility on KKC as a manufacturer (deemed Service provider i.e. Reverse change Machanism X X X X Extracts X X X X X X X X Extracts X X X X ..... oviding one service (receiving Intending commission from outside India) i.e. Business Auxiliary service. Now after 1st June 2016 Krishi Kalyan Cess will be applicable to all services. Below is the Para 3.1 of F. No. 334/8/2016-TRU dated 29.02.2016 Enabling provision for levy of "Krishi Kalyan Cess": 3.1 Krishi Kalyan Cess (KKC) is proposed to be levied with effect from 1st June, 2016 on any or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the taxable services at the rate of 0.5% on the value of such taxable services. Credit of Krishi Kalyan Cess paid on input services shall be allowed to be used for payment of the proposed Cess on the service provided by a service provider. In above clarification letter TRU is clarify that CENVAT credit will be available to the service provider. My query is: Since we are paying service tax on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reverse charge basis (deemed Service provider) and also in Business auxiliary service (as a service provider) can CENVAT credit is available to us? (received on various input services used in relation to manufacturing activity) Reply By Rajagopalan Ranganathan: The Reply: Sir, You can avail the credit of Krishi Kalyan Cess paid by you under RCM and can utilise the same for payment of Krishi Ka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lyan Cess only on output service provided by you. Reply By KASTURI SETHI: The Reply: I concur with the views of Sh. Rajagopalan Ranganathan, Sir Reply By Mahir S: The Reply: Credit of Krishi Kalyan Cess paid on input services shall be allowed to be used for payment of the proposed Cess on the service provided by a service provider. Reply By Yatin Bhopi: The Reply: Thanks a lot Sir, Can we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used this credit also to pay Krishi Kalyan cess liable to pay under reverse change? Reply By surya narayana: The Reply: Dear Friend, The answer to your first point is that whether you can avail the credit ST paid under reverse charge Mechanism is YES except, for the services that are under exclusion clause in the definition and the same can be used for payment of your service Tax liability. Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cond question related to KKC, as already stated , you can avail the cenvat credit and this particular amount taken as credit to be utilized only for payment of KKC and not for any other purpose. Hope your query is clarified. Best Regards Suryanarayana Reply By Rajagopalan Ranganathan: The Reply: Sir, In my view cenvat credit cannot be used for payment of service tax under reverse charge mech ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anism. The same is ture in respect of Krishi kalyan CEss also. Reply By KASTURI SETHI: The Reply: Agreed with Sh. Rajagopalan Ranganathan, Sir. As per Rule 3(4) Explanation inserted vide Notification No.28/12-CE(NT) dated 20.6.12 (effective from 1.7.2012) , "Explanation. - CENVAT credit cannot be used for payment of service tax in respect of services where the person liable to pay tax is the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice recipient". Hence cenvat credit cannot be used to pay tax by service receiver. Service tax has to be paid by cash only through i.e. GAR-7 challan. Once paid, Cenvat credit can be taken, if otherwise, it is his eligible 'input service'. It is applicable to new cess also. Reply By Yatin Bhopi: The Reply: Thanks a lot Sir Reply By surya narayana: The Reply: Dear sirs Agreed with the poin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. I have given my view considering that the company also registered as ISD and once ISD distributes the credit the manufacturing unit can use for payment of ST or duty and otherwise there is no purpose in allowing credit of such amount paid under reverse charge. Further, this restriction is meant for ISD considering that he can only distribute such amount and cannot use for payment of ST Hope t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he point is clear
Regards
surya
Reply By Ganeshan Kalyani:
The Reply:
I agree with the experts opinion above, CENVAT Credit on KKC is not eligible to manufacturer, as it has been clarified that such is only eligible to service provider and that to only to set it off against KKC. Thanks. X X X X Extracts X X X X X X X X Extracts X X X X
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