Firms to challenge input tax credit notices, revenue department's stand

According to Cenvat rules, companies have to reverse input tax credit on exempted turnover arising out of non-core businesses

Some of the companies that have received notices to reverse input tax credit in service tax are planning to challenge the revenue department's stand at the commissioner level. According to them, they should not be served the notices as they have not given any services by investing in securities and mutual funds.  

The notice, if upheld, could have repercussions for the Goods and Services Tax (GST) regime as well as similar provisions exist in the new indirect tax regime as well. 

The companies have not been trading in stocks but investing in stocks and as such not providing any services, said Abhishek