Excise credit against Service tax liability

[Rudrayani Shedjale]

Hello

we are into works contract business.

we have service tax registration.

we pay service tax on work contract services provided to our clients.

recently we have purchased a machinery for business use on which the supplier has charged us excise.can we take credit of the same against our service tax liability?

please guide.

[YAGAY andSUN]

if this machine is being used in works contract business then you can avail CENVAT credit and adjust it against Service Tax Output liability.

[Rajagopalan Ranganathan]

Madam,

As per Sl. No. 12 of Notification No. 26/2012-ST dated 20.6.2012 as amended " construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly except where entire consideration is received after issuance of completion certificate by the competent authority you can avail an abatement of 30% subject to the condition that-

(i) CENVAT credit on inputs used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004.

(ii) The value of land is included in the amount charged from the service receiver.

If you provide any other service and the capital goods are used in providing the output service you are eligible to avail the credit.

[Rudrayani Shedjale]

can we avail the the cenvat credit against our service tax liability or is it restricted to 30% only?

[YAGAY andSUN]

Service Tax credit will be availed on the amount of service tax paid.

[KASTURI SETHI]

I support the views of both experts.

[Ganeshan Kalyani]

Yes the amount paid as service tax is eligible for credit.

[Rudrayani Shedjale]

Thank you very much for this valuable information.

AI Summary

CENVAT credit on excise paid for machinery can offset service tax liability, subject to abatement and eligibility conditions. CENVAT credit for excise paid on machinery used in providing taxable works contract services may be availed and adjusted against service tax output liability under the CENVAT Credit Rules. Where an abatement applies (such as certain construction services), credit availability is limited by the abatement framework and by conditions including that input CENVAT has not already been taken and that land value is included in charges.