Service tax
Querist :
Anonymous
(Querist) 08 June 2010
This query is : Resolved
In case if one if providing taxable output service and also doing trading activities than can the common inpute sevice utlized for both the activities be available to be adjusted as CENVAT Credit against output service tax liablity or input service has to be bifercated under the two heads; i.e. output service and trading activity
Jagmohan Rawat
(Expert) 08 June 2010
Pls refer to Rule 6(3) of the cenvat credit rule 2004 for this matter. According to this rule in case assessee is providing taxable as well as exempt goods/ services then assessee has option either to maintain separate books of accounts for both kind of services end take credit accordingly or pay 5% or 6% of the exempted goods or exempted services respectively and take credit of full input service tax. Further under second option you have another option of reversing the proportionate input service tax attributable the exempted goods / services. In case of trading as per your case in my opinion you should opt for paying 5% on the gross margin (Sale Price- Purchase Price) and take credit of service tax fully. Further you must intimate the option chosen to the excise officer as per the said rule.
It is to be noted that input services exclusively used for non- taxable goods/services are not eligible for the credit.
Further there are about 16 prescribed common input services which are fully allowable irrespective of there common use for taxable and non taxable goods or services.
