CENVAT of Service Tax Paid on Works Contract for painting job of Civil Structure of Factory premises

[Ashish Bansal]

Dear Experts,

My query is regarding the issue of admissibility of Service Tax credit paid under works contract for Painting of newly constructed Building of Factory.

Rule 2(k) of CCR,2002 specifically excludes any input used for construction or execution of works contract of a building or a civil structure or a part thereof.

Rule 2(l) of CCR, 2002 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 in so far they are used for construction or execution of works contract of a building or a civil structure or a part thereof.

To conclude the point of doubt is, 'Do the works contract for painting job is also covered under the above excluding clauses.'

Regards

Ashish Bansal

excludes,-

(A) 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;

- See more at: http://taxguru.in/service-tax/cenvat-credit-input-services.html#sthash.aHE9VrsE.dpuf

excludes,-

(A) 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;

- See more at: http://taxguru.in/service-tax/cenvat-credit-input-services.html#sthash.aHE9VrsE.dpuf

excludes,-

(A) 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;

- See more at: http://taxguru.in/service-tax/cenvat-credit-input-services.html#sthash.aHE9VrsE.dpuf

[Mehul Pandya]

As a provider of Service of Work Contact you can avail service tax credit on painting Job Charges because as per rule 2(I) of CCR, input services are only those which are used for providing output service. Though the inclusive part of definition of input service expands the scope of Input Service, it can be argued that it cannot cover services not related to output services.

In my view you can take cenvat credit in respect of input services directly related to construction services. As far as input credit on Painting material concerns, cenvat credit of the same is not allowable.

[Ashish Bansal]

What if I am availing service of painting as a Manufacturer.

And service relates to one of my newly constructed factory building.

[PARTHASARATHY V]

You may be end up with SCN for demand of duty for the wrong availment of credit along with iNterest and penalty.

AI Summary

Debate on Service Tax Credit for Painting Jobs Under Works Contracts: Insights on Rules 2(k) and 2(l) CCR, 2002. A discussion on a forum addresses the issue of whether service tax credit can be claimed for a painting job under a works contract for a newly constructed factory building. The query highlights that Rule 2(k) and Rule 2(l) of the CCR, 2002 exclude inputs and services used for construction or works contracts of buildings. One respondent argues that service tax credit may be claimed for services directly related to output services, but not for painting materials. Another warns that claiming such credit might lead to a show cause notice for wrong credit availed, along with interest and penalties.