INPUT SERVICE WORKS CONTRACT

[george thomas]

Dear Sir/Madam

We are registered with Service Tax under the Category of providing output service for the following category

1.Hotel Accommodation (S.65(105)(zzzzw) 2. Restaurant Service ( ( S.65(105) (zzzzv)

Apart fro the above ,we are also liable to pay Service Tax as Service Recipient for the following category

1.Manpower Supply ( 100% 2.Works Contract ( 50%) 3.Security Service (100%)

We are availing input service credit also for the service tax paid under Reverse Charge

Now the Department is objecting input service credit aviled and utilized for Works contract ( Service Portion ( service tax paid for Labour,Carpender ,Interior Decoration service etc ) for the construction of Hotel and its maintenance

Kindly clarify credit of Works Contract is eligible for us

AI Summary

Eligibility of Input Service Credit for Works Contracts in Hotels Debated Under Rule 2(l) Cenvat Credit Rules 2004 A service provider in the hotel and restaurant sector queries about the eligibility of availing input service credit for service tax paid under Reverse Charge Mechanism on works contracts related to hotel construction and maintenance. The Department objects to this credit. One respondent agrees with the Department, citing the definition of 'input service' under Rule 2(l) of the Cenvat Credit Rules, 2004, which excludes works contracts from eligible input services post-amendment on 1.4.2011. Another respondent elaborates on the definition changes, indicating that the exclusion of works contracts supports the Department's stance.