Service Tax Credit

This query is : Resolved

Prashant (Querist)
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20 April 2009 Dear All

We are registered under the service tax act for the following services-"Erection & Commissioning" "Works Contract" and "Consulting Engineers"
In this connection I would like to know that can Service tax paid on all the input services be claimed as set off. Similarly we have been told that one can take set off of 20% of service tax paid on input services and not 100%. We are also paying excise duties but since our final product is exempted we are not charging any excise duty at the time of sale. So can this excise duty paid on purchases can be claimed as set off against service tax collected under the above services

CA.Hanumantha Reddy

CA.Hanumantha Reddy (Expert)
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20 April 2009 You can take service tax on all the input services used in or in relation to the above services. However, you can also take the excise duty paid on purchases subject to Rule 6 of CENVAT credit rules, 2004. Further, the disallowance of input credit is not applicable unless you are providing any exempted services or exempted excisable goods. In this regard, the ratio which you have mentioned in your query has been amended.
Pls refer the above said rule.