Service Tax on Renting of Immovable Property

[Kapil Dixit]

We are engaged in construction of a mall. Some finished area has been let out. The query is as under :-

1.  Can the Service Tax paid to the contractors for HVAC, Fire Fighting, Electricity, Glass and panel front façade of a civil structure be claimed as credit for payment of service tax on output services like Rent, HVAC and Common Area Maintenance (CAM).

 2. Can the excise/custom duty paid on the equipments like escalator, chiller and lift be claimed as credit for payment of service tax on output services in which these equipments like HVAC and CAM are used.

Please provide an opinion.

[NEERAJ KUMAR, RANCHI]

As per circular no. 98/2008 -ST this is not permitted, you can refer the same for more clarity, hope answered the query. 

For Q1 since the service is covered under Commercial or Industrial Construction Service or Works Contract Service the sub contractor engaged for finishing services for HVAC, Fire fighting Glass and Panel front facade of a civil Structure which are in the form of finishing services are liable to service tax under the same category in pursuance of latest clarification by Board consequent to Jaya Prakash Industries case.  The service tax paid to these sub contractors can be availed as CENVAT Credit being an input services so long as the sub contractors doesnot avail CENVAT credit on Inputs.

AI Summary

CENVAT credit on contractor services: service tax paid may be claimable if subcontractor is taxable and hasn't claimed input credit.
Whether service tax paid to subcontractors for finishing works (HVAC, fire fighting, electricity, glass and fac ade) can be claimed as CENVAT credit against output services like rent, HVAC and CAM. Circular No. 98/2008 ST indicates such credit is not permitted. An alternative administrative view states that if the subcontracted finishing services fall within Commercial or Industrial Construction Service or Works Contract Service and the subcontractor is liable to service tax and has not availed CENVAT on inputs, the service tax paid may be taken as CENVAT credit as an input service. The question of claiming excise/customs duty on equipment is addressed only by reference to Circular 98/2008 ST disallowing such claims.