CENVAT credit - Works Contract

[KrishnaKumar A]

Dear Experts,

One of my client (proprietary business)is providing works contract service to a Co-operative society. To be more specific, service is in the nature of building their new office. Now my client would like to subcontract this to another Pvt. Ltd Company. In this regards, I would like to know:

1. Whether my client will be able to avail CENVAT credit of the Service tax billed by the Pvt. Ltd. Company.
2. If the company is only providing labour supply contract to my client whether my client will be able to take Cenvat credit?
3. Any effect that may have on the above if my client is also a director of the above mentioned private limited company?

AI Summary

Cenvat credit on works contracts: credit limited to declared service portion; pure labour treated as construction service with supplier liable.
CENVAT credit availability depends on subcontracted service character. If the subcontractor executes the full works contract including materials, input service credit is allowed only for the recognised service portion (architect, finishing, repair, renovation, alteration etc.), with the non-service construction element excluded and reverse charge applying where applicable; subcontractor exemption follows main contractor exemption and subcontractor-paid tax can be claimed as credit by the main contractor. Pure labour supply is classified as construction service, with the labour supplier liable to tax on labour value, without applicability of works-contract abatement or reverse charge; input service credit applies only to taxed output services.