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

Maintenance or repair of computer software: full service tax credit available when linked to manufacture or clearance of goods.
Under the Cenvat Credit framework, Rule 6(5) classifies Maintenance or Repair of Computer software as an input service whose service tax credit is allowable in full even if partly used for exempted activities; where such IT services supplied at a head office are for business purposes and relate directly or indirectly to manufacture or clearance of final products, full credit may be availed subject to compliance with other Cenvat Credit Rules and establishing nexus with manufacture or clearance.