Can Cenvat credit on construction activities of one project be allowed towards output service tax on sale of another project?
Though Cenvat credit Rules do not require one to one relationship, as per rule 6 of Cenvat Credit Rules, Cenvat credit is not available if output service is exempt from service tax. Subject to this restriction, Cenvat credit among various projects is indeed inter-changeable, particularly if you opt for centralised registration. We avail various input services like telephone, courier, mobile, bank charges, audit, security, catering etc. as Head Office. Can we utilise that credit for service tax payable on construction services? Indeed you can do so, but you have to be careful if you are providing both taxable and exempt services and/or trading in goods. In that case, rule 6 of Cenvat Credit Rules will apply.
