Taking service tax input credit on abatement services...urge

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This query is : Resolved

Rajesh (Querist)

18 December 2012 Respected Readers,

If a company receives a service which comes under abatement services, Can that company claim service tax input credit on that services?
Example, A Ltd company employes XYZ Road Carriers & Co to transport its Finished Goods from Chennai to Delhi. The Transport charges are Rs.1,00,000.

1) What is the amount that A Ltd. has to pay as service tax for this amount?

2) Can A Ltd claim input credit on the service tax paid for the above said road carriers?. (My friend says that A Ltd cannot claim input credit)

Please tell me with the relevant section or notification etc.

With regards,
Rajesh.

Vishakha Kejriwal.

Vishakha Kejriwal. (Expert)

19 December 2012 Service tax has to be paid on 12.35%*25%*100000. Input credit on transportation services can be claimed if it is availed in relation to manufacture of final products and the place where goods are transported can be said to be the place of removal. Please note that as per the definition given in 2(l) of the Cenvat Credit Rules credit on outward transportation services is available only upto the place of removal.

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