Service Tax on works contracts

[Pradeep Jain]

Sir,

In case of Work Contract of repairs and maintenance , need to pay service tax on 70% value of the contract and ST on 30% value of the service.

However do we need to reverse the CENVAT credit of inputs used in providing the service on the remainin 30 % value of the Goods as above, used in that services.

Regards

Pradeep Jain

AI Summary

Cenvat credit denial for service portion of works contracts; reversal of credit not required under Explanation 2.
Cenvat credit cannot be availed for the service portion of a works contract as the valuation rules treat that component as a taxable service; therefore there is no obligation to reverse credit attributable to that service portion. A contrary point of view highlights that credit is excluded where inputs are used for construction or foundational works, while repair and maintenance of machinery used in manufacturing may present a distinct factual scenario for creditability.