Reverse Mechanism

[Samik Chaudhuri]

I would like to know whether we can avail Cenvat Credit of Service Tax against Works Contact (Manufacturing Unit) paid by recipient as well as provider. Please inform me at earliest.

With thanks

Samik

AI Summary

Eligibility for Cenvat Credit on Works Contracts: Section 2(l)(ii) Excludes Service Portions, but RCM Payments Qualify. A user inquired about the eligibility to avail Cenvat Credit of Service Tax for a works contract in a manufacturing unit, paid by both the recipient and provider. One response indicated that input credit is not available for works contracts due to exclusions in the Cenvat Credit Rules, specifically Section 2(l)(ii), which excludes service portions in works contracts and construction services. Another response clarified that, under Service Tax laws, credit can be availed for Reverse Charge Mechanism (RCM) payments, regardless of whether one is the service provider or receiver.