Non – availability of credit of input services in case of services where abatement is availed.
In case of certain services like Mandap Keeper, Construction services, Erection Commissioning or installation services, outdoor caterer, rent a cab services, etc an abatement of certain percentage from gross amount was provided subject to the condition that credit of excise duty paid on inputs or capital goods used in providing the said services was not availed and the benefit of notification no. 12/03 was not availed by the service provider. However, service provider was eligible to avail the credit of service tax paid on input services.
These various notifications are sought to be amended by notification no. 1/2006 under which a new condition that the service provider should not avail the credit of service tax paid on input services has been imposed. Therefore, effective from 1st March 2006, the payment of service tax on abated value can be made only when the service provider has not availed the credit of service tax paid on input services.
If i'm not wrong the scope has increased by the finance bill,07
The definition of cab under the Rent-a-Cab-Scheme Operator's service has been extended to include any motor vehicle constructed or adapted to carry more than 12 passengers. However, the renting of the cab for use by an educational body, other than commercial training or coaching centre,is not subject to the levy of service tax.