The revenue department has clarified that a person who is not a service provider but discharges service tax liability on taxable services is not eligible to claim input credit or Cenvat.
The clarification has been issued following representations as to whether such a person is entitled to avail credit of service tax paid even if he is not using such service as input service for use in the manufacture of excisable goods or taxable services.
The issue was raised in the context of service tax paid on goods transport agency service by a person other than a service provider.
The department has pointed out that in the present case, the person liable to pay service tax is neither the provider of an output service nor the manufacturer of final product.
Therefore, the input service cannot be used either for providing output service of a final excisable product. Hence, the person is treated as deemed provider of service in relation to services for which he is taxable only for the limited purpose of discharging the service tax liability and not for all purposes.
It pointed out that the Cenvat Credit Rules are applicable only to the manufacturer of excisable goods or the provider of taxable services.
"It is evidently clear from the provisions of Section 68(2) that the person discharging the service tax liability is neither the provider of output service nor the manufacturer of final product as required under the Cenvat Credit Rules, 2004," it said.
"The view that such recipient of taxable services even if they discharge their service tax liability under Section 68(2) are not entitled to avail credit of the service tax paid on taxable services received by them under Cenvat Credit Rules, 2004, is in accordance with the statutory provisions and there is no scope for any other interpretation," it stated.
