service tax credit on drawing-reg

[Ramakrishnan Seshadri]

Dear Sir,

We are constructing one building in our factory.

The Builder has submitted a bill for drawing plan towards construction of building by charging service tax in his bill.

Our question is whether we can take service tax credit for this .

Could experts please clarify as the credit value is more whether we can take credit or not.

Matter urgent.

Thanks & Regards,

S.Ramakrishnan

[Mahir S]

Sir,

The service provider who constructs the factory building will charge service tax for rendering works contract service/construction service. Therefore you have to pay service tax. But Rule 2 (l) of Cenvat Credit Rules, 2004 defines "input Services” and this definition excludes "service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66 E of the Finance Act.

Also, as the phrase 'setting up" of factory has been removed from the definition of input services, therefore no service tax credit would be available on such services to you.

AI Summary

Input service exclusion bars service tax credit for construction-related works, preventing credit on builder's drawing-plan charge. Charges for drawing plans billed by the builder as part of the factory construction are not eligible for Cenvat/service tax credit because Rule 2(l) of the Cenvat Credit Rules, 2004 excludes the service portion in execution of works contracts and construction services (including services under clause (b) of section 66E), and the removal of 'setting up' from the input services definition precludes credit.