Service tax credit - Maintenance or Repair of Computer software

[Vijay Chitte]

One of our input service provider, providing an IT related services at our HO and Factory likes repairing and maintenance of computer software, computer peripherals, data back up maintaining records, develop the software etc. we are manufacturing of dutiable and exempted goods and this service including in Cenvat Credit Rule, 2004Rule 6(5) specified sixteen services under the category of “Maintenance or Repair of Computer software” says’ “this services are utilized for both taxable and exempted services the credit of service tax paid shall be allowed for full amount irrespective of fact that some amount has been used for exempted services also.” My query is, Can we interpreted that these services are used in (HO and Factory) or in relation to manufacture of the final products? If yes, Can we utilize the 100% service tax credit?

[Surender Gupta]

In the absence of any contrary facts, any exprenses incurred at HO can be said as incurred for the purpose of business which include inter alia manufacturing at Factory also. Therefore, you may avail 100% service tax credit subject to other conditions of the CC Rules.

[Madhukar N Hiregange]

The credit of service tax is available for all input servcies by manufacturer directly or indoirectly in the manufacture of final product or CLEARACNE of final products from the facotry. I am of the view the the baisc nexus once established the credit would be available. We should also remember that the cemnvat credit legilation is a beneficient one.

AI Summary

Eligibility for Full Service Tax Credit on IT Services under Cenvat Credit Rule, 2004 Discussed for Headquarters Use A discussion was initiated regarding the eligibility to claim full service tax credit on IT-related services, such as software maintenance and repair, used at a company's headquarters and factory. The query sought clarification on whether these services, which support both taxable and exempted goods, qualify for full credit under Cenvat Credit Rule, 2004. One response indicated that expenses incurred at the headquarters could be considered for business purposes, including manufacturing, thus allowing full credit. Another response supported this view, emphasizing the beneficial nature of Cenvat credit legislation and the availability of credit for services linked to manufacturing.