Service tax
RADHAKRISHNAN
(Querist) 25 February 2013
This query is : Resolved
Sir,
My client is service tax assessee under the services"cable operator".they are importing set top boxes and availing credit on the admissible part.the set top boxes are capital goods which are sold to our subscribers only.they come under "deemed sales".Also VAT is paid under sale of goods act.
The service tax dept demanded service tax under the services"supply of tangible goods".My client refused saying that the goodsare sold and VAT is being paid and hence is out of the purview of srvice tax.The dept confirmed the demand and the matter is before CESTAT.
Now the dept says that as thecapital goods (set top boxes) are sold and as VAT is being paid the Cenvat credit on account of these capital goods must be reversed.They say that the credit on account of capital goods cleared as such should be reversed.
But as we are in the business of cable operators the set top boxes are essential to our main business. Whether we should reverse the Cenvat credit ?
Anirudh
(Expert) 25 February 2013
According to your profile: "You are a Superintendent of Central Excise".
How can you have any client?, unless you say that you were a "Superintendent of C.E." and not now.
Even as a Supdt., you ought to know that because of lack of clarity on the issue (in spite of the decision of the Supreme Court in BSNL's case that VAT and Service Tax are mutually exclusive), both VAT and Service Tax are being insisted upon and and paid by the Assessees. As your matter is before the CESTAT, you can pursue the same.
As regards, the question of reversal of cenvat credit on the ground that the Settop box has been sold out - it is to be stated that it is only a "deemed sale" and not actual sale. The ownership is still with the Assessee.
RADHAKRISHNAN
(Querist) 25 February 2013
Dear friend,
The person who asked the query is a close friend of my mine.I had asked him to reverse the credit.But he wanted to make it sure and hence i gave him the username and password.
The crux of the matter is that the capital goods have been removed as such.deemed sales comes within the ambit of sale of goods Act and so goes out of the ambit of service tax.
Thanks for the reply and for the vigilance exercised
