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

Input service credit exclusion: works-contract service portions for construction or maintenance of buildings are ineligible for credit.
The amended definition of "input service" excludes the service portion in execution of works contracts and construction services insofar as they are used for construction or execution of a building, or for laying foundations or supporting structures. Accordingly, service tax paid under RCM for the service component of works contracts used in constructing or maintaining the hotel does not qualify as eligible input service credit.