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Service tax

S .Ghosh (audit assistant) (258 Points)

23 May 2014

Dear

Members

Our company provides "Works contract service" Sub Clause (zzzza),

And we avail abatement Notification Number "030/2012-S.T." Sl. No. "9"

We purchase Concrete from a register dealer with Excise Duty[2%] and VAT[14.5%]. Can we get Input Credit of Excise Duty against Service tax Payable though we take benefit[60% Abatement] in the case of Service Tax. Please assist me the right process.

Thank you.

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1 Replies

Vikas (CA) (1135 Points)
Replied 26 May 2014

Dear Soumav,

Firstly, Notification No.30/2012-ST does not prescribe for any abatement scheme, instead it prescribes for reverse charge mechanism. All the abatement related provisions are prescribed under Notification No.26/2012-ST.

Secondly, there is no abatement of 60% available to a works contractor. I believe you are referring to the Valuation mechanism of 40% on "Original Works" under Rule 2A of Service Tax (Determination of Value) Rules, 2006.

Thirdly, Soumev, you should refer to the Explanation 2 to Rule 2A, wherein there is a restriction on claiming Cenvat credit on inputs. Hence, you cannot claim any excise duty paid as Cenvat credit against Service tax liability on Works Contract Services.