Understanding Rule 2A of Service Tax (Determination of Value) Rules, 2006.
In this Rule 2A, there is “Explanation 2” to Sub-Rule (ii) which says that works contract service provider shall not take CENVAT credit of duties paid on any inputs, i.e. CENVAT on input services & capital goods will be available.
My query is since this explanation is in relation to Sub-Rule (ii) of Rule 2A, will it apply to Sub-Rule (i) as well?
In my opinion under Sub-Rule (i) one is paying service tax at full rate on the value of service portion, hence one shall be allowed to take the benefit of CENVAT in respect of inputs.
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