Credit taken on 75% in labor contractor

[Lok B. Chand]

Percentage of Service Tax payble by the person receiving the Service can take the credit on it.

[Vijay kumar]

Dear Sir, the question is not clear. From the query, it appears that u r the manufacturer who wants to take credit of the service tax paid by the labour contractor under Manpower supply service. If that is the case, prior to 1.7.2012, you could take full credit of such tax paid. After 1.7.2012, the issue is clarified in the Service Tax Education Guide as follows:

10.1.4 Will the credit of such tax paid be available to the service recipient?
Normally, the credit of the entire tax paid on the service received by the service receiver would be available to the service recipient subject to the provisions of the  Cenvat Credit Rule, 2004. The credit of tax paid by the service provider would be available on the basis of the invoice subject to the conditions specified in the  Cenvat Credit Rule, 2004. The credit
of tax paid by the service recipient under partial reverse charge would be available on the basis on the tax payment challan, again subject to conditions specified in the said Rules.

[Lok B. Chand]

Dear Sir,

Please Clear the following line under Rule -3 in Cenvat Credit Rule, 2004

Provided that if the amount so calculated is less than the amount equal to the duty leviable on transaction value, the amount to be paid shall be equal to the duty leviable on transaction value.]

Dear sir, please clear the above lines are applicable after 10 year i.e. 40 quarter or below 10 year i.e. from the date of taking the CENVAT credit.

AI Summary

Cenvat credit entitlement clarified: recipient may claim service tax credit on invoice or challan depending on charge mechanism.
Post 1.7.2012, under the Cenvat Credit framework the service recipient may claim credit of tax paid by the service provider on the basis of a valid invoice, subject to conditions in the rules; where tax is paid by the recipient under partial reverse charge, credit is allowable on the basis of the tax payment challan, subject to those rules. A compliance question concerns whether the proviso requiring payment equal to duty on transaction value applies after ten years or within ten years from taking Cenvat credit.