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Work contract tax

shailesh khandelwal (Service) (39 Points)

29 October 2012

Dear All

Can we get Credit of Vat & Service Tax on Work contartct bill.

E.g. We have received bill from contractor for Rs. 32,62702 and the contractor has charges VAT @ 5% i.e. 163135 & service tax @ 4.12% i.e. 134423/-

So Can we get credit for the vat under mahavat & Service tax. we are manufacturing company.

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5 Replies

CA bhargava (CA) (2017 Points)
Replied 29 October 2012

Mr.Sailesh ., you can take the credit of both the Service tax portion and the Vat Portion paid on the bill., you can claim the input of the Vat paid on the above bill.....

shailesh khandelwal (Service) (39 Points)
Replied 29 October 2012

Mr Bargava

But please note that we have received one single bill for material & Labour and he has charges service tax @ 4.12% can we still get the credit.

Becuse some people have told me that if he has charges vat @ 5% & service tax @ 4.12% then he will be under composition scheme and hence we can not get credit for same.

do you know any ruling or notification for same.

CA bhargava (CA) (2017 Points)
Replied 29 October 2012

Mr .Sailesh Though it is a composite scheme ., as per the Cenvat Credit rules ., u can claim both the Vat and Sales Tax paid as input., the Composite Scheme is for the contractor and it is irrespective of that we can claim the credit on what ever tax we pay.

CA bhargava (CA) (2017 Points)
Replied 29 October 2012

See Point No.IX and last para....

(1) A manufacturer or producer of final products or a provider of taxable service shall be allowed to take credit (hereinafter referred to as the CENVAT credit) of -

(i) the duty of excise specified in the First Schedule to the Excise Tariff Act, leviable under the Excise Act;

(ii) the duty of excise specified in the Second Schedule to the Excise Tariff Act, leviable under the Excise Act;

(iii) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textile and Textile Articles) Act,1978 ( 40 of 1978);

(iv) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 ( 58 of 1957);

(v) the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14 of 2001);

(vi) the Education Cess on excisable goods leviable under section 91 read with section 93 of the Finance (No.2) Act, 2004 (23 of 2004);

(via) the Secondary and Higher Education Cess on excisable goods leviable under section 136 read with section 138 of the Finance Act, 2007 (22 of 2007);
[ Substituted vide Notification No. 27/2007-Central Excise (N.T.) dated 12-05-2007 ]

(vii) the additional duty leviable under section 3 of the Customs Tariff Act, equivalent to the duty of excise specified under clauses (i), (ii), (iii), (iv), (v) (vi) and (via);[Substituted vide Notification No. 10/2007-Central Excise (N.T.) dated 01-03-2007 ]

(viia) the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, [OMITTED- as substituted by clause 72 of the Finance Bill, 2005, the clause which has, by virtue of the declaration made in the said Finance Bill under the Provisional Collection of Taxes Act, 1931 (16 of 1931), the force of law ]:

(In clause (viia), portion beginning with the words and figures "as substituted by clause 72" and ending with the words "the force of law" has been omitted vide Notification No. 22/2005 -Central Excise (N.T.), dated 13/05/2005)

Provided that a provider of taxable service shall not be eligible to take credit of such additional duty;

(Clause (viia) has been inserted vide Notification No. 13/2005 - Central Excise (N.T.), dated 01/03/2005)

(viii) the additional duty of excise leviable under section 157 of the Finance Act, 2003 (32 of 2003);

(ix) the service tax leviable under section 66 of the Finance Act; and

(x) the Education Cess on taxable services leviable under section 91 read with section 95 of the Finance (No.2) Act, 2004 (23 of 2004),

“(xa) the Secondary and Higher Education Cess on taxable services leviable under section 136 read with section 140 of the Finance Act, 2007 (22 of 2007); and

(xi) the additional duty of excise leviable under section 85 of Finance Act, 2005 (18 of 2005 )

(In clause (xi), the words and figures "section 85 of Finance Act, 2005 (18 of 2005 )" has been substituted vide Notification No. 22/2005 -Central Excise (N.T.), dated13/05/2005)

(Clause (xi) has been inserted vide Notification No. 13/2005 - Central Excise (N.T.), dated 01/03/2005)

paid on-

(i) any input or capital goods received in the factory of manufacture of final product or premises of the provider of output service on or after the 10th day of September, 2004; and

(ii) any input service received by the manufacturer of final product or by the provider of output services on or after the 10th day of September, 2004,

including the said duties, or tax, or cess paid on any input or input service, as the case may be, used in the manufacture of intermediate products, by a job-worker availing the benefit of exemption specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 214/86- Central Excise, dated the 25th March, 1986, published in the Gazette of India vide number G.S.R. 547 (E), dated the 25th March, 1986, and received by the manufacturer for use in, or in relation to, the manufacture of final product, on or after the 10th day of September, 2004.