Cenvat credit on service tax paid on construction activities

This query is : Resolved 

01 December 2011

Dear sir/s,
Plz help me on this issue
One of my Client (Company) is using the services of contractors (Civil, Mech., Etc..) for setting up of factory which is under construction.
1. Whether can it eligible for cenvat credit on service tax paid on construction services.
2. After budget i.e 1.4.2011 onwards, cenvat on service tax paid related to construction activities are ineligible, So on what services it is ineligible?
3. If service provider provides services in relation to excavation, back filling, etc. which is not construction services, can we take cenvat credit on this services.
4. If contractor raise only one bill for different services, can we take cenvat on eligible services.
plz clarify its urgent........
Thanks a lot In advance.

02 December 2011

Points 1, 2 & 3

List of Services Specified Under Rule 2 (l)(ii)(A) of CENVAT credit Rules, 2004
1. Port Services [65 (105) (zn)]
2. Port Services in other port [65(105)(zzl)]
3. Air Port Services [65(105)(zzm)]
4. Commercial or Industrial Construction Services [65(105)(zzq)]
5. Construction of Complex Services [65(105)(zzzh)]
6. Works Contract Services [65(105)(zzzza)]
7. Architect’s Services [65 (105) (p)]
If the above services are used for the
(a) construction 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
then these services shall not be considered as input services and accordingly CENVAT credit shall not be allowed. In other words, if the above services are used for provision of services other than construction etc in clause (a) & (b) then they shall be included in the definition of input services and accordingly CENVAT credit shall be taken.

Point 4

If contractor raises one bill for number of service then u can take CENVAT credit if as per provision of CENVAT credit rules cenvat credit is allowed in respect of all services covered by the invoice. But it is advisable in order to make it easily identifiable you should ask for separate invoices for separate services.

I hope above analysis will be helpful for you .

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02 December 2011

Thanks sir,
I have small doubt that if we used the above mentioned services prior budget, whether can we take cenvat credit.

02 December 2011

Service tax paid for Laying of Internal roads, Can we eligible to cenvat credit.

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