About Me
- ravindra kumar
- I did my graduation from IIT Delhi and Post Graduate Diploma in Supply Chain and Logistics from LIBA Chennai.Worked five years in the BHEL then fifteen years in Revenue Department .Currently practicing as Indirect Tax Consultant in Service Tax, Excise and Customs.
Thursday, November 22, 2007
Refund of service tax to 100% EOU
On any taxable service ,you have to pay service tax.But being the 100%EOU ,you can get refund of these input taxable services under Rule 5 of Cenvat credit,2004.There is a Delhi Tribunal order to support this.
Wednesday, November 7, 2007
whether cenvat credit is available on common taxable services used in trading,manufacturing and taxable services
The issue of cenvat credit on common input services for manufacturing, services and trading activity is full of contradiction. It is beyond the competence of any person to advise you on the issue which involves the integration of taxes which are not possible under the present federal system of Indian Constitution. The Honourable Supreme Court is the guardian of the Indian Constitution. Therefore, the clear picture of the present issue would emerge either the legislature make laws or the court interpret the intention of the legislature or pass any order in their wisdom.
Department view and Tribunal ruling-
In the case of Colgate Palmolive (I)Ltd. Vs Comm of Central Excise, Mumbai, reported in 2007 (7) S.T.R. 294(Mumbai) the department has taken a stand that the assesses is liable to maintain separate account of the services and demanded payment, equal to 10% of the total price of the exempted goods under rule 6(3) of the cenvat credit 2004. Also proposing to deny the entire credit availed on common input services & penalty of equal amount.
It is advisable till the matter is settled by the court, the credit attributable to trading is to be reversed on pro-rata based on Generally Accepted Accounting. Principle and common business practice. Although the Cenvat rules do not prescribe any pro-rata reversal of the credit for the common input service used in the trading activity. But the legislature intention appear to be that you get credit equal to what you already paid .
The calculation for reversing credit may be based on sale value of trading item and non-trading item. The balance credit may be utilized for paying duty for dutiable goods and service tax. You may follow rule 6 of the Cenvat credit rule for this balance amount of credit for non trading activity
No Cenvat credit available for trading activity even for common input services falling under rule 6(5) of the Cenvat credit rules 2004.
The branch offices and Head office may act as an ISD and distribute the credits.
It is advisable to consult an Auditor for Generally Accepted Accounting Principle for appropriation of credit, based on sound business.
Department view and Tribunal ruling-
In the case of Colgate Palmolive (I)Ltd. Vs Comm of Central Excise, Mumbai, reported in 2007 (7) S.T.R. 294(Mumbai) the department has taken a stand that the assesses is liable to maintain separate account of the services and demanded payment, equal to 10% of the total price of the exempted goods under rule 6(3) of the cenvat credit 2004. Also proposing to deny the entire credit availed on common input services & penalty of equal amount.
It is advisable till the matter is settled by the court, the credit attributable to trading is to be reversed on pro-rata based on Generally Accepted Accounting. Principle and common business practice. Although the Cenvat rules do not prescribe any pro-rata reversal of the credit for the common input service used in the trading activity. But the legislature intention appear to be that you get credit equal to what you already paid .
The calculation for reversing credit may be based on sale value of trading item and non-trading item. The balance credit may be utilized for paying duty for dutiable goods and service tax. You may follow rule 6 of the Cenvat credit rule for this balance amount of credit for non trading activity
No Cenvat credit available for trading activity even for common input services falling under rule 6(5) of the Cenvat credit rules 2004.
The branch offices and Head office may act as an ISD and distribute the credits.
It is advisable to consult an Auditor for Generally Accepted Accounting Principle for appropriation of credit, based on sound business.
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