Input Service Distributor (ISD)... clarity needed

Live burning issue has been well explained with examples. Nexus for distribution is ideal provision which was in existence prior to amendment of Rule 7 of CCR effective Apr.2014.

Amendment came because of representations by various Forums to remove the nexus with various units for distribution. So this is the side effect of relaxation without amending input service definition and creation of new problems by removing nexus for distribution.

Both examples are adverse to assessee and there is no favourable due to non-availability of CENVAT credit to unit 3. 80% distribution without set off is no use

With regard to time limit applicable to ISD, ISD also to be treated as taker of CENVAT credit and the restricted proviso applicable to ISD also. Rule 2(m) of CCR while defining “input service distributor” mentions “distributing the credit of service tax paid”. Further according to the said Rule, ISD is “an office of manufacturer or service provider” which qualifies them as deemed manufacturer or service provider so as to avail CENVAT credit under Rule 3 of CCR and on the same logic covered under sixth proviso of Rule 4(7) of CCR . With regard to distribution by ISD there is no restriction of time limit and ISD date is relevant for the unit to count 6 month time

posted by

G.Mani

govindan_mani govindan_mani 21/01/2015