Utilise Input on Single Time Premium Payment on Lease Land Purchase

[Pandiyan Perumal]

We Bought 99 years lease land in May 2016 and paid service tax as per the service tax Act. And Utilized the same as Input against our central excise payments. Now the GST team conduct audit and they say it is ineligible credit. Please advise us.

[KASTURI SETHI]

It appears that availment of Cenvat Credit fell under exclusion clause during that period. You are to prove that Cenvat Credit was utilized in or in relation to the manufacture and clearance dutiable final productn and at the same time such availment was not under exclusion clause. If you want comprehensive and fool-proof reply, pl. elaborate your query.

AI Summary

Input tax credit on leasehold land may be ineligible unless nexus to dutiable manufacture and no exclusion applies.
Taxpayer claimed service tax/Cenvat credit on purchase of long term leasehold land and utilised it against central excise; GST auditors view the credit as ineligible. Allowability turns on whether the credit falls within statutory exclusion clauses and whether the credit can be shown to have been utilised in or in relation to the manufacture and clearance of dutiable final products. Further factual elaboration is required to assess exclusion applicability and the necessary nexus to manufacture.