Service tax credit

[RADHAKRISHNA KOPPARAPU]

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.

AI Summary

Cenvat credit on construction-related input services constrained; eligibility depends on statutory exclusions and value rules for reimbursements.
Whether service tax paid during construction of a hotel can be taken as Cenvat credit and accumulated for later use depends on the nature of the services and statutory exclusions in the Cenvat Credit Rules. Services used for construction, foundations or structural support are not creditable, while finishing, repair or alteration services may qualify. Specified exclusions such as architect services, works contracts and certain commercial or industrial complex services (where abatement is claimed) bar credit. Reimbursed expenses paid to service providers are includable in taxable value and affect credit availability.