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Cenvat Credit Availment

Service Tax - Started By: - abhishek ghai - Dated:- 26-4-2016 Last Replied Date:- 12-6-2016 - Dear experts,Pls resolve the following problems related to service tax and share the case laws associated to it, if any.1. Whether cenvat credit of service tax can be availed on rental paid by company during the pre-operative period to owner whose premises would be used by service provider for providing restaurant services. The service tax relates to pre-operative period ranging from 4-5 months???2. Whe .....

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stat providing the restaurant service.Q.2: - Service tax paid on maintenance service for maintaing the premises can be availed only when such premises is rented out and service tax is paid on the rent collected. - Reply By Ganeshan Kalyani - The Reply = Yes sir the service tax credits can be availed but cannot utilize unless there is output tax. Thanks. - Reply By KASTURI SETHI - The Reply = Sh.Abhishek Ji, Answer to your Q.No.2 is YES. - Reply By abhishek ghai - The Reply = Dear sir,Thanks for .....

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Query No.1, I do not agree with the reply of other experts. I doubt the admissibility of input service credit in such a strange situation. - Reply By MARIAPPAN GOVINDARAJAN - The Reply = There are some case laws in which it was held that CENVAT credit can be taken for the period even before registration with the Department. - Reply By KASTURI SETHI - The Reply = In such situation the rigours of litigation cannot be ruled out. - Reply By Ganeshan Kalyani - The Reply = Sir,If the amount is substa .....

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t rules. - Reply By KASTURI SETHI - The Reply = Sh.Abhishek Ghai Ji, There is a world of difference between Central Excise and Service Tax regarding availment of Cenvat Credit. In Central Excise, Cenvat Credit is allowed even on the strength of invoices received prior to registration because the inputs are used in the manufacture of dutiable final product. This is not the situation in the Restaurant Service. You paid the rent prior to operative period or prior to registration and how can that in .....

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agree to you though in current case.Company is not availing threshold exemption and is charging Service tax from first bill itself. Further cenvat credit rules states that Cenvat credit on input services can be used only on those services which have been used in providing output services.Can a view b framed that during the preoperative period company was making the premises suitable for its purpose of providing the restaurant services as restaurant requires suitable arrangement, layout which is .....

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ral Excise because inputs though received during the pre-operative period, yet the same would be ultimately used in or in relation to manufacture of the final product.Finished goods are physically present to prove that inputs received prior to registration or during pre-operative period, have been used. This is my view. I may be wrong. Also seek for opinions of other experts. - Reply By Ganeshan Kalyani - The Reply = Sri Kasturi Sir, please go through the decision in case of ''Indswift L .....

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s not started and as such the credit was challenged but CESTAT allowed the credit. Thanks. - Reply By KASTURI SETHI - The Reply = Dear Sh.Kalyani Ji, Regarding Central Excise, I have already agreed. There is no dispute.Pl. read all my replies. Regarding the situation explained by Sh.Abhishek Ghai, Sir I would like to say there is no room for 'Ifs' and 'buts' in law. In the situation explained by him, he cannot connect past to the present. In the pre-operative period, no restauran .....

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Dear Sethi Sir,Pls explain if in any judgement/ Case laws issue in relation to input services has been raised that at what point of time such services can be said to have completed or provided in relation to an output service.Quoting one more example, In telecom sector or even in case of entertainment/advertisement services, many R&D work is usually done before providing output services, such input services availed prehanded provides benefit over a prelonged period of time.Will the cenvat c .....

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i - The Reply = Sir I agree with Sri Kasturi Sir in toto. I was referring to a case law pertaining to Central excise. I also agree with him that I takes lot of time to trace out a case law which would favour the assesses contention. It also requires more than 5 hours to dig out the citation. But Sri Kasturi does it for free and even all the experts in the forum are doing it for free. The consultancy charges are very costly in the market. But we are happy to help. Thanks. - Reply By KASTURI SETHI .....

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o modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward .....

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taxable territory but shall not include a service,- (1) specified in section 66D of the Finance Act; or (2) where the whole of service tax is liable to be paid by the recipient of service.] Accordingly, when you are not providing any service at all, the question of availing cenvat credit does not arise. Even though Karnataka High Court has held in the case of Service Tax - mPortal India Wireless Solutions (P.) Ltd. Versus Commissioner of Service Tax - 2011 -TMI - 208750 - KARNATAKA HIGH COURTSer .....

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- The Reply = Dear sir,Thanks for ur response, as we are all very well aware that the facts and circumstances of the case my lead to different opinions, fully respecting ur view and further supporting you. In the present case, as I discussed above previously, though the input service is not utilised in the same period when the premises is under preparation but it is also a basic fact that till the premises is prepared for the said purposes.....it cannot be used to provide the main output servic .....

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