Determination of place of removal in service tax law

SERVICE TAX
One key area in service tax law which has caused considerable disagreement between the tax payers and the authorities has been in relation to applicability to input tax credits on a variety of input services. One reason for the difficulty has been with regard to interpreting the expression ‘place of removal’, as occurring in the service tax provisions. Rule 2 of the Central Excise Rules defines an input service, for the purpose of admissibility to credits, as any service used by a provider of taxable service for providing an output service; or used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearances of final products from the place of removal. This Rule has been amended in Budget 2008 in order to modify the concluding part of this definition to limit the services to those relating to clearances of final products upto the place of removal. This article is however in relation to the interpretation of the expression ‘place of removal’. Consequently, the inclusive part of the definition, which follows the aforesaid initial part of the definition of input services, is also not addressed herein.
S Madhavan / New Delhi April 28, 2008
http://www.business-standard.com

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