Credit of excise to be set off with service

[Anil Jangid]

my client having dealership of vehicles (car). they has service tax liability in servicing work of cars. can he take credit of excise duty on spare part purchase ???? today they are not registered with excise

AI Summary

Dealerships can't offset excise duty on spare parts against service tax for car services per Finance Act, 1994. A client with a vehicle dealership inquired about offsetting excise duty on spare parts against service tax liability for car servicing. The consensus among responders was that this is not permissible. According to the Finance Act, 1994, invoicing spare parts separately and paying sales tax or VAT classifies the activity as trading, excluding it from service tax credit eligibility. Service tax should be collected only on labor and repair services, not on spare parts. The discussion concluded with agreement on this interpretation, emphasizing that excise duty credit cannot be used for service tax liabilities in this context.