NOTIFICATION No. 14/2002-SERVICE TAX, Dt. 01/08/2002
Service Tax Credit Rules, 2002
G.S.R. (E).- In exercise of the powers conferred by clause (ee) of sub-section
(2) of
section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules , namely :-
1. Short title and commencement.-
(1) These rules may be called the Service Tax Credit (Second Amendment) Rules, 2003.
(2) They shall come into force on the date of their publication in the Official Gazette.
(Above Rule 1. has been substituted vide
Ntf. No. 05/2003-ST, dt. 14/05/2003)
[OLD -
(1) These rules may be called the Service Tax Credit Rules, 2002.
(2) They shall come into force on the 16th day of August, 2002.
2. Definitions.- (1) In these rules, unless the context otherwise requires,-
(a) “Act” means the Finance Act, 1994 (32 of 1994)
(a) “output service” means any taxable service rendered by the service provider to a customer, client, subscriber, policy holder or any other person, as the case may be;
(b) “input service” means any service
[OLD - taxable service
] received and consumed by a service provider in relation to rendering of output service;
(In above clause (b) words "service" has been substituted vide
Ntf. No. 05/2003-ST, dt. 14/05/2003)
3. Service tax credit.-
(1) An output service provider shall be allowed to take credit (hereinafter referred to as service tax credit) of the service tax paid on input service in the following manner, namely:-
(a) where the input service falls in the same category of taxable service as that of output service, service tax credit shall be allowed to be taken on such input service for which invoice or bill or challan is issued on or after the sixteenth day of August, 2002; (b) in any other case, service tax credit shall be allowed to be taken on such input service for which invoice or bill or challan is issued on or after the fourteenth day of May, 2003:
Provided that the output service provider shall be allowed to take such credit, on or after the day on which he makes payment of the value of input service and the service tax paid or payable as indicated in invoice or bill or challan referred to in sub-rule (1) of rule 5.
(Sub-rule (1) has been substituted vide
Ntf. No. 05/2003-ST, dt. 14/05/2003)
[OLD -
1) An output service provider shall be allowed to take credit (herein referred to as service tax credit) of the service tax paid on such input services, which fall in the same category of taxable service as that of output service, for which invoice/bill is issued on or after sixteenth day of August 2002.
]
(2) For the purposes of these rules, two services shall be deemed to be falling in the same category of taxable service, if the input service and output service fall in the same sub- clause of clause
(105) of section 65 of the Act.
Provided that the taxable services defined in sub-clauses (zm) and (zp) of clause
105 of section 65 of the Act shall be deemed to be falling within the same category.
(In above sub-rule (2) bold words has been substituted vide
Ntf. No. 05/2003-ST, dt. 14/05/2003)
Illustration:
(i) A photography studio in course of providing photography services avails service
of processing labs for developing and processing of exposed film and printing of
photographs. In this case service provided, by the colour lab to photography studio
and by the photography studio to a customer, both fall in the same category of
service i.e. photography service. Therefore, photography studio is entitled to take
credit of service tax paid by the processing lab.
(ii) A stevedore hires dock labour from the port trust and provides such labour to
his client. In this case the service provided, by the port trust to stevedore and by
stevedore to client, both fall in the category of port service. Therefore, stevedore
is entitled to take credit of service tax paid by the port trust.
(iii) An advertising agency may avail services of a photography studio and/or a
sound recording studio and/or a video tape production agency during the course of
rendering service to it’s client. Service provided by the photography studio or the
sound recording studio or the video tape production agency, as the case may be,
does not fall in the category of advertising agency service. Therefore, advertising
agency is not entitled to take credit of service tax paid by a photography studio or
a sound recording studio or a video tape production agency.
(3) No service tax credit shall be allowed on input service received and consumed in relation to rendering of such output service which is either exempt from whole of the service tax leviable thereon or is not a taxable service, except in the circumstances mentioned in sub-rules (4) and (5).
[OLD - such output service which is exempt from whole of the service tax leviable thereon.
]
(In sub-rule (3) words before OLD has been substituted vide
Ntf. No. 05/2003-ST, dt. 14/05/2003)
(4) Where a service provider avails credit on any input service and renders such output services which are chargeable to service tax as well as exempted services or non taxable services, as the case may be, then the service provider shall maintain separate accounts for receipt and consumption of input service meant for consumption in relation to rendering of output services which are chargeable to service tax and the inputs service meant for consumption in relation to rendering of output services which are exempted services or non-taxable services, as the case may be. The service provider shall take credit only on that portion of input service, which is intended for use in relation to rendering output services, which are chargeable to service tax.
(5) In case the service provider, opts not to maintain separate accounts of input service meant for consumption in relation to rendering of such output services which are chargeable to service tax as well as exempted services or non-taxable services, he shall be allowed to utilize service tax credit for payment of service tax on any output service only to the extent of an amount not exceeding thirty-five per cent. of the amount of service tax payable on such output service.
(6) 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.
(Above sub-rule (4) to (6) has been inserted vide
Ntf. No. 05/2003-ST, dt. 14/05/2003)
4. Utilisation of service tax credit.- (1) The service tax credit availed
on input service may be utilised for payment of service tax on the output
service.
(2) Refund of service tax credit availed on input service shall not be allowed
under any circumstance.
5. Documents and accounts.- (1) The service tax credit shall be
availed on the basis of an invoice or bill or challan issued by the service provider of
input service on or after 16th day of August 2002, indicating clearly the serial
number of document, date of issue, description and value of the input service, the
service tax paid /payable, service tax registration No. and address of input service
provider.
(2) The output service provider availing service tax credit shall take reasonable
steps to ensure that the input services in respect of which he has availed the
service tax credit are the services on which the service tax, as indicated in the
documents on the basis of which credit is availed, has been paid.
Explanation: The output service provider availing service tax credit shall be
deemed to have taken reasonable steps, if he satisfies himself about the identity
and address of the input service provider, issuing the documents on the basis of
which the service tax credit is availed and that the details regarding description and
value of input service received by him has been furnished correctly in the
documents.
(3) The output service provider availing service tax credit shall maintain proper
records in which the relevant information regarding the Sl. No. and date of
document on which service tax credit is availed, service tax registration No. and
name of the input service provider, description and value of input service, service
tax credit availed, service tax credit utilized for payment of service tax on output
service shall be recorded. The burden of proof regarding the admissibility of service
tax credit shall lie upon the person taking such credit.
(4) The output service provider availing service tax credit shall submit to the
Superintendent of Central Excise, a return in the form annexed to these rules along
with the Form ST-3 as specified in rule 7 of the Service Tax Rules , 1994.
6. Recovery of service tax credit.- Where the service tax credit has
been wrongly availed or utilized or service tax has not been paid by the input
service provider for any reason, whatsoever, such credit along with interest shall be
recoverable from the person availing such service tax credit and the provisions of
section 73, 75, 76 and 78 of the Act shall apply mutatis mutandis for effecting such
recoveries.
FORM
(see sub-rule (4) of rule 5)
Return under rule 5 of the Service Tax Credit Rules, 2002
(For the period from________ to________)
Input service
| Sl No. | Date and no. of document on which credit is availed | Details of input service provider | Details of input service |
| ST regd. No. | Address | Description | Value | Credit taken |
| | | | | | | |
Service tax credit
| Opening balance | Credit taken | Credit utilised | Closing balance |
| | | | |
Output service
(a) Description of output services in relation to rendering of which the input services are consumed:
(b) Whether separate account is maintained for receipt and consumption of input service meant for consumption in relation to rendering of output services which are taxable or exempted or non-taxable service: Yes/No
(Above "Output Service" has been inserted vide
Ntf. No. 05/2003-ST, dt. 14/05/2003)
Place:-
Date :- | Name and signature of the assessee or
his authorised representative”. |
F.No. B11 /1 /2002-TRU
(G. D.LOHANI)
Under Secretary to the Government of India
(Please refer
NTF. NO. 06/2004-ST, Dt. 09/07/2004 for further amendments in Service Tax Credit Rules, 2002)
(Please refer
Ntf. No. 05/2003-ST, dt. 14/05/2003)
(Pl. refer
Instruction No. 01/2002-ST, Dt. 01/08/2002)
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