Services Tax is an domanda. It has shown to the government that you can tax the most significant sector of our overall economy without having a codified law. It has shown to the tax managers that it is better to tax without a law as law reduces your discretion. The only sufferer is tax assessee- however in any case, rules or any law, they are there to undergo. gst full form
The administration of Services Tax show ad-hocism at its zenith. In this ad hocism the method of collecting Service Taxes on Goods Transport Agent is high point in enforcing uncertainty- I use read uncertainty of law is the greatest cruelty. The service tax administrator has forgot this cliche.
Document 265 of the Metabolism stated that no tax shall be levied or gathered save by authority of law. No individual can argue that service taxes is being collected without authority of law- after all there are several clauses of Finance Act of various years authorizing levy and collection of service taxes. So what if these clauses are not clear-Article 265 didn’t refer to clear law. What exactly if these clauses are generally not certain- Article 265 would not refer to certain rules. Thus I am sure that administration of service tax is not at all violating any term of this article 265 of the Constitution. And soul of any law is or was never important to the tax facilitators.
And then I discovered an article written by a learned tax administrator in this esteemed journal (GTA-Liability to pay Service Duty and Credit thereon, 06\ (2) STR J147]. The learned author argued that liability to pay service tax is not the only criterion to avail credit. I am not able to agree more. Although I differ from him on various counts. This kind of paper is an try out to examine the legal provision (howsoever uncertain they are) with respect to Cenvat Credit on service tax paid on external freight service- that is freight on transportation of goods after clearance from factory gate, following your place of removal, after the Central Excise duty has been paid.
I acknowledge with the learned publisher that liability to pay a tax and taking credit of the particular repayment of tax are two different things. They may be ruled by different provisions of law. You may pay a tax but you will not likely get any credit- like taxes paid on broadband diesel. You might not exactly pay the tax but you could get credit- we can still keep in mind various form of considered credit available to the assessees. Off course repayment of tax may be a criterion to allow credit and generally speaking it is a criterion.
Credit rating of service tax is availed under Cenvat Credit rating Rules, 2004. Thus we have to examine these Rules to ascertain whether credit of service taxes paid on outward shipping is available to the manufacturer or not. Regulation 3(ix) of the Cenvat Credit Rules, 2004, says as,
RULE 3. CENVAT credit. – (1) A manufacturer or producer of final products or a provider of taxable service shall be allowed to take credit (hereinafter referenced to as the CENVAT credit) of –
(ix) the service tax leviable under section 66 of the Finance Act; paid on –
(ii) any input service received by the manufacturer of last product or by the provider of output services on or after the 10th day of The month of september, 2004,
Thus a produce of final product shall be allowed to take credit of service duty paid on any “input service”.
Input service has been defined as,
2(l). “input service” means any service, –
(i) employed by a provider of taxable service for providing an output service, or
(ii) employed by the maker, whether directly or indirectly, in or in relation to the manufacture of ultimate products and clearance of final products from the place of removal,
and includes services found in relationship to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or the workplace relating to such factory or areas, advertisement or sales advertising, market research, storage upto the place of removing, procurement of inputs, activities in relation to business, such as accounting, auditing, financing, hiring and quality control, instruction and training, computer network, credit rating, share computer registry, and security, inward transport of inputs or capital goods and outward travel upto the place of removal.