Service tax on construction bill of building

[CABIJENDERKUMAR BANSAL]

Our Company is mfg co. We are setting up a new unit at Tronica City . We are claiming Service tax on construction bill of building for payment of excise duty. Our assessing officer deny it. He told you can take service tax credit on renovation of factory , not on construction of factory. Please tell with supporting document. Thanks in advance. Ca. Bijender Bansal

[Rama Krishana]

You must show the basic definition of input services as per rule 2(l) of the Cenvat Credit Rules, 2004 which allows credit of service tax paid on input services which are used in relation to setting up of a factory. The construction of a factory premises is nothing but setting up a factory. So go ahead.

AI Summary

Cenvat credit entitlement: service tax on construction of factory premises qualifies as input service credit under the rules. The Cenvat Credit Rules treat services used in relation to the setting up of a factory as input services; thus service tax paid on construction of factory premises, being part of setting up the factory, qualifies for input tax credit, and denying credit for construction while allowing it for renovation is inconsistent with that definition.