Abatement issue

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Student (Querist)
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15 December 2011 A provided services to B for say, 100000 which is subject to abatement of 40%

So, service tax is collected on 60000 only ie 6180.

A has ST cenvat credit of 1000. What is the ST liability of A?

Can 1000 be adjusted against 6180 and only the difference is payable?

Further, can B avail the full amount of 6180 as cenvat credit?

Sreekumar

Sreekumar (Expert)
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15 December 2011 Yes.

But what is the service? (catagory)

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Student

Student (Querist)
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15 December 2011 thanks.
Services provided are 1. tour operator & 2. renting of cabs.
Sir, is your ans Yes for both the questions I had posted - incase of "A" & "B"

Sreekumar

Sreekumar (Expert)
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15 December 2011 When input service is required for providing output service or manufacture of goods, the receiver of input service can take credit.

Student

Student (Querist)
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15 December 2011 so cenvat is available for both the parties A & B - am I correct?

PUNEET GOYAL

PUNEET GOYAL (Expert)
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15 December 2011 Your client is claiming abatement under NN 01/2006- ST dated 01.03.06 and abatement under said notification is allowed subject to following conditions:
Provided that this notification shall not apply in cases where, -
(i) the CENVAT credit of duty on inputs or capital goods or the CENVAT credit of
service tax on input services, used for providing such taxable service, has been
taken under the provisions of the CENVAT Credit Rules, 2004; or
(ii) the service provide r has availed the benefit under the notification of the
Government of India in the Ministry of Finance (Department of Revenue), No.
12/2003-Service Tax, dated the 20th June, 2003[G.S.R. 503 (E), dated the 20th
June, 2003].

Thus A can not take cenvat credit as per above Notification and as far as B is concerned it will be allowed as per provision of CENVAT credit rules, 2004. Means depends on the fact whether B can claim credit or not.

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Student

Student (Querist)
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15 December 2011 Thanks puneet.

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