Credit availability for service tax and vat

[Narasimha Subramanian]

We are a trading and manufacturing company with SSI status for our manufacturing activity. We are also coming under Excise for our manufacturing. We have started implementing MS Navision ERP in our company and we found that the invoice from the supplier of this product has VAT charged on the licenses sold to us and Service Tax on the Software development charges or customization charges. Can credit be taken on the VAT and Service Tax charged as we are registered under Excise for our manufacturing? If Credit can be taken, is there any guideline available for apportioning the credit between manufacturing and trading activity? Please clarify.

AI Summary

Company Seeks Guidance on Cenvat Credit for VAT and Service Tax on ERP Software Licenses and Customization Services A trading and manufacturing company with SSI status inquired about taking credit on VAT and Service Tax charged on ERP software licenses and customization services. The company is registered under Excise for manufacturing. One response suggested availing cenvat credit for service tax related to manufacturing but advised proportionate credit for trading activities, as trading is not subject to excise or service tax. Another response cautioned against taking full credit, recommending proportionate credit allocation between trading and manufacturing to comply with Cenvat Credit rules.