Cenvat credit
This query is : Resolved
Praveen Kumar K
(Querist)
16 December 2013
1. Mr.A Provides works contract of installation of an automatic weather station. He imports various components & assembles it on site to form a weather station.
2. Installation requires scientific & technical knowledge
3. As per Rule 2A, he pays service tax on 40% of GAC
Can he claim credit of Service tax paid to C&F agent for importing the components ? Or can credit be denied stating that such Input Service is only for Sale component in Works contract & not for Service component.
2. Installation requires scientific & technical knowledge
3. As per Rule 2A, he pays service tax on 40% of GAC
Can he claim credit of Service tax paid to C&F agent for importing the components ? Or can credit be denied stating that such Input Service is only for Sale component in Works contract & not for Service component.
AJITHKUMAR M
(Expert)
16 December 2013
Dear friend,
Explanation 2 to Rule 2A, stipulate that the provider of taxable service shall not take CENVAT credit of duties or cess paid on any inputs, used in or in relation to the said works contract, under the provisions of CENVAT Credit Rules, 2004.
As rightly doubted by you, in my opinion, the credit can be denied as the C&F agent's service is not used in providing the output service.
Explanation 2 to Rule 2A, stipulate that the provider of taxable service shall not take CENVAT credit of duties or cess paid on any inputs, used in or in relation to the said works contract, under the provisions of CENVAT Credit Rules, 2004.
As rightly doubted by you, in my opinion, the credit can be denied as the C&F agent's service is not used in providing the output service.
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