Withdrawal of inter-unit transfer of CENVAT credit facility available to Large Tax Payer Units (‘LTU')
PRIOR to Budget 2014-15 LTUs with multiple service tax registrations could freely transfer CENVAT credit available with one of its service registered premise to another service registered premise. However, vide Budget 2014-15 an amendment to Rule 12A(4) of the CENVAT Rules was made to withdraw this administrative facility effective July 11, 2014.
In a recent RAC meeting of Bangalore Zone, it was represented, "As a result of the amendment carried out vide the Budget 2014-15, one of the key benefits available to a LTU assessee has been taken away with which has impacted all the LTU assessees very dearly. As a result, the present LTU scheme does not offer any substantial benefit to the service providers and the existing LTU assessees are exploring the option to exit the scheme. The Credit transfer facility provided to LTU assessee under the earlier Rule 12A of the CENVAT Rules may kindly be re-instated as this was one of the key benefits promised to LTUs at the stage of their registration under the LTU scheme."
The Department replied, "it is a policy matter. Recommendations would be communicated to the Board.”
Please also see Bid Adieu to LTU in - 11.07.2014