Construction of new factory and input service tax credit

[govindaraj kolappan]

Dear Sirs / Madam

We are an export unit

going for expansion of factory building

the construction contract is given to a builder

Builder is charging service tax @ 40% of the construction value @14.5%

Question : whether this service tax credit can be taken as input credit of other out put services performed within India

if not , whether we can apply for refund against the export to be made out of the new factory

Kindly give your views

With regards

AI Summary

Export Unit Advised Against Claiming Service Tax Credit for New Factory Construction Under CENVAT Credit Rules, 2004 An export unit inquired about the eligibility of taking service tax credit for the construction of a new factory. The construction contract involves a service tax charge of 40% on the construction value at 14.5%. Several responses indicated that the CENVAT Credit Rules, 2004 do not allow for such credits or refunds, as the 'Setting Up of Factory' provision was removed in 2011. Although some judgments have permitted credit for construction activities, these cases are prone to litigation. Experts advised against taking credit due to potential disputes and audits.