Availment of input service Credit on Works Contract Service

[Sanjeev Chauhan]

Respected All,

Kindly guide,

A sugar manufacturing  unit, (Co-Op. P. Ltd.)  is availing credit on Erection, Commissioning & Installation services and on construction services used for construction of Godown and other civil structures for the   period 2011-12 & 2012-13.

W.e.f. 01.04.2011 input service credit on Works contract services is denied in Cenvat Credit Rules. 

Is the assessee  allowed to take credit on Erection, Commissioning & Installation services and on construction services used for construction of Godown?

Regards,

Sanjeev.

 

AI Summary

Cenvat credit denial on construction-related services limits input credit for works contracts, making credit for erection services risky.
Cenvat credit on the service portion of works contracts and construction services used for building or civil structures or for laying foundations is denied following deletion of "setting up" from the input service definition; credit on construction of a godown is therefore not permissible. Although erection, commissioning and installation services are not explicitly excluded, under the post-negative list regime they may be treated as part of works contract or construction services, making claims for credit on those services risky and requiring professional judgment.