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Is service provider eligible to take VAT credit on capital g

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(Querist)
28 August 2010 VEHICLE service STATION EXIST .For providing vehicle service they bought plant & Machinery .On that can they take credit? . Iam asking for TNVAT. While providing service they are making spare sales.With that VAT liability can VAT credit be setoff ?
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Gagan Agarwal

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Gagan Agarwal (Expert)
30 August 2010 Under TNVAT Act, credit of capital goods is allowed only if capital goods are used in manufacturing taxable goods.

In your case, capital goods are not used in manufacturing taxable goods but rendering services. Accordingly, you will not be able to claim set-off.

Are you trading in spares? In that case you will be able to claim VAT setoff of VAT paid on purchases of spares against their liability on sales.
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