Inputs on service tax

This query is : Resolved

CA VAIBHAV (Querist)
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24 July 2012 My Client have Construction business and went for composite scheme. As per the guideline it raise bill of 60: 40 ration and charge 5 % mvat and 4.12 Ser tax.however for execution of this contract they appoint sub-contractor , subcontractor also raised the bill on assessee of 60: 40 ration and charge 5 % mvat and 4.12 Ser tax. this 4.12% of ser tax input will available for set off against the out put liability of 4.12%

Doubts :
1) as per my knowledge,WCT 4.12% of ser tax charge is on the composite scheme and once asessee apply for composite scheme , such assessee have only output liability and he will not eligible for any ser tax set off.
2) however , there is some ser tax provision is silent about taking input set off , as input available only in the case of when bill charged @ 10 / 12 % ser tax ( i.e nor ser tax % recommanded in the finance act) or abated % i.e 4% etc

Amol S Joglekar

Amol S Joglekar (Expert)
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24 July 2012 Ans 1: Absolutely correct. No credit for input. Ans 2: No input credit available for service tax as well.

CA Vibhash Kumar Sah

CA Vibhash Kumar Sah (Expert)
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24 July 2012 I may be grossly mistaken by the wording but if r u telling 60:40 is the ratio for Material and service portion and thereafter composite scheme has been applied i,e, service has been discharged @ 4.12% on Service portion only then its a wrong interpretation of the law. If u have opted for composition scheme then Service tax should be discharged on entire contract @ the specified rate and Input Credit is available.

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