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Work contract

R S B (C.A FINAL) (91 Points)

21 September 2013

Under WORK CONTRACT where a Company is paying service tax under composition scheme {under rule 2A (ii)}. My first question is whether a company can claim cenvat credit on materials like cement,bricks .steel etc on which excise duty is paid?

I have read some where that excise duty cannot be claimed on excise duty paid on goods under composition scheme.if i m wrong please explain me.

Secondly, tell me when can a company opt for composition scheme?

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7 Replies

Prashant Kini (Article Assistant) (154 Points)
Replied 21 September 2013

Under composition scheme cenvat credit on input used cannot be taken. But there is no restriction on availing cenvat credit on capital goods and service used in execution of work contract. There is no specific case when a company can opt for composition scheme. It is up to the Company to either opt under Rule 2A(i) or 2A(ii)

R S B (C.A FINAL) (91 Points)
Replied 23 September 2013

I have read some where that rule 2A (II) shall only apply when valuation cannot be done as per rule 2A (I) .

i got ur point that cenvat credit can be claimed only in case of capital goods and service rendered in execution of work contract.

then tel me how will i find value of service rendered in execution of work contract (under composition scheme)???

Prashant Kini (Article Assistant) (154 Points)
Replied 23 September 2013

Nothing as such. It is at the option of company to discharge its liability either under 2A(i) or 2A(ii). Value of service rendered under composition scheme is clearly mentioned under Section 2A(ii). There are in all three categories. 40% in case of original contracts, 70% in case of maintenance or repair or reconditioning of any goods and 60% in case of other contracts