CENVAT CREDIT ON REPAIRS TO FACTORY BUILDINGS

[THESINGARENI COLLIERIESCOLTD]

As per the definition of Input Service ( Rule 2(l) ), Input Service includes "services used in relation to modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises"

and excludes "service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as specified services) in so far as they are used for - (a) construction or execution of works contract of a building or a civil structure or a part  thereof; or (b) laying of foundation or making of structures for support of capital goods, except for the provision of one or more of the specified services;"

from the above, 1. Can we avail the CENVAT credit on repairs to factory buildings which may comes under the category of works contract service.

CA V S Krishna Mohan V

[Indian Commerce]

By S.Shanmugam

Hi,

In my opinion, as per the exclusion clause of Rule 2 (l) of Input service definition, you are not eligible to avail the CENVAT Credit on repairs to factory buildings, when it comes under the category of Works contract nature.

The repairing activity of a factory relating to the service nature is only eligible as Input service.

regards

SS

[Mahir S]

Service portion in execution of works contract and construction service are excluded from the definition of input service.

However, these services will be eligible as input service if used for the provision of one or more of the specified services i.e. works contract/construction of building or structure or laying of foundation or making of structures for support of capital goods.

[Indian Commerce]

Hi Mr.Naveed S

I agree with you, I mentioned my point for the end user and not the service provider.

-ss

[PAWAN KUMAR]

Dear Sir,

As per my view, services used exclusively for repair to factory buildings will be admissible for cenvat, however services under works contract will be inadmissible for cenvat.

AI Summary

Cenvat credit eligibility hinges on whether factory repairs are genuine input services or excluded works contract services.
Availability of CENVAT credit for repairs to factory buildings depends on classification under Rule 2(l): genuine repair, renovation or modernisation services of factory premises qualify as Input Service, whereas the service portion of a works contract and construction services are excluded, except where those excluded services are used for provision of one or more specified services allowing the exception.