TaxTMI 
TaxTMI 
Services provided in Jammu & Kashmir. Is it necessary to reverse 8% of value, when separate accounts are not maintained. How to classify the Services, Exempted or Non-Taxable service? when CENVAT credit rules not applicable to J & K as per the Cenvat Credit Rule sub rule (2) of Rule 1. Please refer the case laws if available.
Classification - exempted and non-exempted services
10 May 2009 
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Cenvat credit limitation: allocate input service credit proportionately where services span non taxable and taxable territories.
No service tax is payable in the non taxable territory under the Cenvat rules, so cenvat credit is not available for services consumed solely there. With centralized billing or common input services used both inside and outside that territory, apportion input credit and claim cenvat only for the portion relating to taxable services; if values cannot be segregated, apply the prescribed apportionment formula for common input services. (AI Summary)
No service tax is payable in the non taxable territory under the Cenvat rules, so cenvat credit is not available for services consumed solely there. With centralized billing or common input services used both inside and outside that territory, apportion input credit and claim cenvat only for the portion relating to taxable services; if values cannot be segregated, apply the prescribed apportionment formula for common input services. (AI Summary)