Cenvat Credit is allowed to output service provider in respect of service tax paid on input services, which are consumed in providing output service.
It is argued that CENVAT Credit is not allowed on Service Tax paid on mobile phones. Argument is backed by Circular No. 59/8/2003 dated 20.06.2003.
According to me Cenvat credit is available on mobile bills also. I am supporting my viewpoint by following two arguments
Argument: 1Rule 3(6) of erstwhile Service Tax Credit Rules, 2002 read as:
"Service tax credit on the service provided in relation to telephone connection shall be allowed only in respect of such telephone connections which are installed in the premises from where output service is provided."
The Service Tax Credit Rules, 2002 has been substituted by CENVAT Credit Rules, 2004 vide notification no. 23/2004-CE(NT), dated 10-09-2004. The new Rules does not contain any prohibition to take credit of service tax paid on mobile phone. Hence, Cenvat credit on mobile phone is available w.e.f. 10-09-2004.
Argument: 2
"Indian Rayon & Industries Ltd. vs. CCE Bhavnagar 2006 (4) STR 79 (Tri-Mumbai)",
The Tribunal Held that service tax paid on mobile phone is available as credit to eligible service providers/manufacturers in the absence of any express prohibition under CENVAT Credit Rules, 2004. It is further held that Board's Circular No. 59/8/2003-ST dated 20-06-2003 was relevant only under the erstwhile Service Tax Credit Rules, 2002 and can not be made applicable to CENVAT Credit Rules, 2004
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