29 October 2013
My Client is a partnership firm providing Electrical Contract service. In a particular contract with a PSU company, it has agreed to supply various electrical goods like cables, panels, pole, switches, jumpers, MS Angles & Channels, etc. along with excavation of earth, dismantling of defective parts, fixing and maintenance of the same as per requirement at agreed rate contract. As per contract, service tax shall be charged extra on 20% of value and VAT on 80% value. So, this is a 'Works Contract Service' U/s 65B(54). Can it Avail Cenvat Credit on goods purchased for executing this works contract towards supply portion which is exempted from levy of tax?
29 October 2013
Kindly Note Explanation (2) to Rule 2A of Service Tax (Determination of Value) Rules, 2006 which prohibits taking of Cenvat Credit on Inputs in Works Contract. I have reservations over the validity of the restriction imposed by the said explanation.
CAclubindia
