Dear Members and professionals
We are constructing a Five star Hotel and we may be starting the operation probably from 2013 jan onwards.
During the construction time we engage somany consultants(both indian and foreign) and contractors and other people whoever required for completion of construction. We pay so much of service tax to them through their bills.
The question is can we accumulate this service tax paid during the period of construction and use that during operation of hotel against the liablity of service tax i.e, can we take Cenvat credit now and accumulate and carrie forward and utilise after commencing the operation.
A clear clarification is solicited.
Eligibility of Service Tax Credits for Hotel Construction: Mixed Opinions on CENVAT Credit Rules and Input Services A forum participant inquired about the eligibility to accumulate service tax credits paid during the construction of a five-star hotel and use them against future service tax liabilities once the hotel begins operations. Various experts provided opinions, with some stating that credits for construction-related services are generally not eligible, especially for services like architecture and works contracts. Others suggested that credits might be permissible for certain input services, excluding those specifically restricted by CENVAT credit rules. The discussion also touched on the inclusion of reimbursed expenses in taxable service value. The consensus was unclear, reflecting differing interpretations of the rules. (AI Summary)
TaxTMI 
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