Section 3(2) in The Service Tax Credit Rules, 2002
(2)For the purposes of these rules, two services shall be deemed to be falling in the same category of taxable service, if the input service and output service fall in the same sub-clause of clause (90) of section 65 of the Act.Provided that the taxable services defined in sub-clauses (zm) and (zp) of clause 90 of section 65 of the Act shall be deemed to be falling within the same category.Illustration: - (i) A photography studio in course of providing photography services avails service of processing labs for developing and processing of exposed film and printing of photographs. In this case service provided, by the colour lab to photography studio and by the photography studio to a customer, both fall in the same category of service i.e. photography service. Therefore, photography studio is entitled to take credit of service tax paid by the processing lab.(ii)A stevedore hires dock labour from the port trust and provides such labour to his client. In this case the service provided, by the port trust to stevedore and by stevedore to client, both fall in the category of port service. Therefore, stevedore is entitled to take credit of service tax paid by the port trust.(iii)An advertising agency may avail services of a photography studio and/or a sound recording studio and/or a video tape production agency during the course of rendering service to it's client. Service provided by the photography studio or the sound recording studio or the video tape production agency, as the case may be, does not fall in the category of advertising agency service. Therefore, advertising agency is not entitled to take credit of service tax paid by a photography studio or a sound recording studio or a video tape production agency.
