Service tax input

This query is : Resolved

priyanka kapoor (Querist)
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05 October 2015 Sir,

We are an authorized dealer of the product of Ashok Leyland Ltd in the state of Rajasthan.

We provide service in relation to repair & maintenance of motor vehicles(including heavy commercial vehicle/light commercial vehicles/cars etc.).In the course of servicing we take some support from outside also.

Part of service process is carried by the outside service provider & rest by us.

Then we make the bill with full amount on customer including service tax.

We take the input of service tax charged by the outside service provider for providing service of repair & maintenance.

Are we right in our approach?

Prabhat Kumar

Prabhat Kumar (Expert)
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05 October 2015 you are a service provider and any service used by a service provider for providing output service do fall with in the definition of input service.you are entitled for the credit and approach appears to be correct.

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priyanka kapoor

priyanka kapoor (Querist)
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05 October 2015 But we have received a notice for wrong availment of service tax input in accordance with exclusion clause (BA) of Rule 2(I) of Cenvat Credit Rules 2004.

How should we proceed?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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05 October 2015 Notice is wrongly issued clause (BA) excludes only motor vehicle as capital asset. Here it is not a capital asset for the dealer.

priyanka kapoor

priyanka kapoor (Querist)
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05 October 2015 No.The clause excludes servicing of motor vehicle in all the cases other than when used as capital goods.
In our case it is not capital goods which means we would not be eligible for input as per that clause

priyanka kapoor

priyanka kapoor (Querist)
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06 October 2015 Is there any way out.How should I proceed further

Prabhat Kumar

Prabhat Kumar (Expert)
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06 October 2015 you are not interpreting the law in correct manner.Rule (2l) is the rule and BA is exception.According to BA credit is not available if motor vehicle is not a capital goods for the service provider.suppose I am a service provider and have a car which is not connected with providing the service and so it is not a capital goods for me,here BA will be applicable.
In your case motor vehicle need not be a capital goods as you are providing a Taxable service to vehicle owner and are entitled for all the legitimate credit.
Just give a reasoned reply to your notice,you have a case to contest.

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