SERVICE TAX ON PROJECT CONTRACT

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SIVARAMAN

SENIOR EXECUTIVE ACCOUNTS

64 Points Posted on 19 November 2008

We are executing Civil works order for one of our customers. we do not avail abatement and charge service tax in full ie 12.36% on services rendered by us . we take service tax credit on the rawmaterils (steel, cement) purchased by us. These materilas are given to our subcontrcator , (who is also registered under service tax ) . WE also take credit for the service tax charged by our subcontractor on his labour bill.

Is it right to take cenvat credit both on Exice duty of Rawmaterials and service tax of our labour contractor Bill.

Or is the labour contractor only can take credit for the Excise duty of the rawmaterials purchased by us and given to him and we are not supposed to take credit?

Please advise.

Replies (2)

Srinu Lanka

working

29 Points Posted on 20 November 2008

Yes,

you can take Cenvat credit , but please check from VAT angle how can you charge service tax on Full value , there may be problem from VAT angle

Adarsh Jain

SERVICE

22 Points Posted on 22 November 2008

Yes you can take the credit of the raw material purchased by you subject to the condition that your contract is a total contract ie supply and erection. and you are paying the service tax on the full bill amount. (Material + Service charges).