cenvat credit under works contract service

[Guest]

Dear sir/ maa'm

i m a builder registerd as works contract service under service tax department. After completing the construction of a building, i will hire a Agent/ Broker to sale that building and that broker charge me brokrage + service tax and i will pay the same. can i take credit of that service tax paid to the broker for the sale of building under works contract service.???

if there is ant law governing behind it please let me about it. i really want to find it.

 

Thanking you !!!

[YAGAY andSUN]

No, you can't avail the CENVAT credit on Service Tax paid on taxable services, since, the definition of input services has been amended w.e.f. 01-04-2011 where as such availment of credit had been specifically denied.

[CASeetharaman KC]

The definition of Input service itself excludes any inuts relating to Works contract and hence input credit would not be available. The relevant provisions are as under:

Exclusion clause of Section 2(l)(ii) of Cenvat Credit Rules states as under:

[but excludes],-

                     [(A) service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as specified services) in so far as they are used for -

                    (a)  construction or execution of works contract of a building or a civil structure or a part thereof; or

                    (b) laying of foundation or making of structures for support of capital goods,

                    except for the provision of one or more of the specified services

[Guest]

Here i want to say about input service not of input under works contract service. Under works contract service, we can take credit of Capital goods & Input services but not of Input. Here I want to say that Sales promotion expenses on which i have paid the service tax on commssion of that, then  can i take credit of that because in input service definiton iclearily said that input service includes Sales Promotion & advertisement. The Definition of Input Service is Under : 

 

 "input service" means any service,-

(i) used by a provider of taxable service for providing an output service; or

(ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal,

and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal;

AI Summary

Cenvat credit denial on works-contract-related services prevents credit for broker commission paid on property sale. A builder cannot claim Cenvat credit on service tax paid to a broker for sale of a constructed building because the definition of input service excludes the service portion in execution of a works contract and construction services; despite 'input service' listing advertisement and sales promotion, the works-contract exclusion denies credit for services connected to construction or execution of the works contract, though capital goods and non-excluded input services may remain creditable.