Service tax

Hey Guys,

Could You Sort out my query,

Here it is,

A Construction Company Has taken a Contract from State Govt to Construct PIPE LINE FOR WATER SUPPLY WHICH IS EXEMPT FROM ST.

In The Running Account Bill(RA) Govt Is Charging WCT

The Company Is accounting WCT As receivable......

1. whether this WCT is paid by Both or only Govt?

& the same Co Has GIven some work to other parties for sub Contract. they are charging Service TAX,

2. Can the co avail Input on SERVICE TAX.