Input credit of service tax - Set off of service tax liability

[Guest]

a company whoes turnover is exceeding Rs. 1 crores but product manufacturing is non excisable hence no excise is charged to the customers. However during installation of machinery the company is charging eraction charges on which service tax is charged. Now my questions are 1. whether all expenses paid on which service tax paid where input credit of service tax available can be reduced from service tax liability? 2. In case any item used for manufactuing of machinery as above includes cenvat credit can be used to take set off of service tax liability? 3. As there is only one service provided by company to its customer as specified above, whether 100% input credit can be availed?

[Surender Gupta]

(1) Yes, you can avail the credit of service tax paid on input services utilized to provide output services. (2) A credit of excise duty paid on capital goods is available only if those capital goods are being utilized into providing output services. In this case since, capital goods are utilized to manufacture goods not providing output services, you can not avail the credit accordingly on capitla goods. (3) You can avail 100% credit of input services utilized into providing output services.

AI Summary

Company Queries Service Tax Input Credit for Machinery Installation, Clarified: Input Credit Applicable for Output Services Only A company with a turnover exceeding Rs. 1 crore, manufacturing non-excisable products, queries about service tax input credit. They charge service tax on machinery installation. The questions are: (1) Can service tax paid on expenses be reduced from service tax liability? (2) Can CENVAT credit on items used in machinery manufacturing be set off against service tax liability? (3) Can 100% input credit be availed for the single service provided? The response clarifies: (1) Input service tax credit can be availed for output services. (2) Credit on capital goods is not available as they are used for manufacturing, not services. (3) 100% input service credit is applicable for output services.