A query on service tax

Balaji (Querist) 24 March 2010 This query is : Resolved
Dear Sir,

One of our clients is a registered service tax provider registered under the category “Construction Services In Respect Of Commercial Or Industrial Buildings And Civil Structures”
He deals in works contract business. He charges sales tax (VAT) @ 2% and paying it. He charges 10.3% service tax on 33% of the value (Without VAT compliment). He engages in certain cases service tax providers who has carried out pure labor as well as Works contract and charged service tax.

The question is:

1. Whether the client can avoid the service tax paid?
2. Whether the service tax charged without VAT is correct?

Please clarify.

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S R agrawal (Expert) 22 May 2010
Dear sri Balaji, answers to ur querries are as under:-
1. Your client can not claim CENVAT credit of service Tax paid as abatement is subject to non-availmnent of CENVAT Credit.
2. Service Tax charged without VAT is correct as VAT does not form part of the assassable value in terms of Section 67 of The Finance Act,1994.

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