Works contract service - composition scheme

Ameya Makarand Lonkar (CA Final Student) (56 Points)

06 January 2012  

 

I am reproducing sub-rule 2A of rule 3 (inserted in 2011) of Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007.
 
"(2A) The CENVAT credit of tax paid on taxable services as referred to under sub-clauses (zzd), (zzq) and (zzzh) of clause (105) of section 65 of the Finance Act, 1994, shall be available only to the extent of 40% of the service tax paid when such tax has been paid on the full value of the service after availing CENVAT credit on inputs."

The whole rule can be confirmend from: :  https://www.eximkey.com/contents/showpage1.asp?pageid=23045

Please tell, what do you mean by "Full value of service" and "After availing CENVAT credit on inputs"?

Also, please specify, to apply this rule, should the input service provider (i.e. provider of services mentioned in (zzd), (zzq) and (zzzh) be in composition scheme or not?