A "XYZ" company, registered under VAT & Service Tax category Works Contract, is procuring a manufacturing fabrication contract from its clients. This includes man, material, premises from the part of the "XYZ" company, and the end product is billed to the Client. Here we need to charge VAT.
Further, "XYZ" arranges all the material, equipments required for fabrication work at its premises / yard and appoints another company "PQR" for providing only labour service viz: welder, fabricator. "PQR" is registered under Service Tax category "Repairs & Maintenace". Considering the fact that "XYZ" has appointed "PQR" for new manufacturing / fabrication work, can "PQR" charge Service Tax to "XYZ"?
"XYZ" can only charge VAT on manufactured product from its Client.
Can "XYZ" claim cenvat credit for service tax charged by "PQR"?
Kindly advise.
CAclubindia
