Credit of service tax on factory building construction

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Ravi Jagetiya(CA Final) (Querist)
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25 June 2012 I am Manufacturer/service Provider, can I claim CENVAT Credit of Service Tax Element on Factory Building/ Office Premises against my liability towards Excise/Service tax on output services. Relevant extract in favor of assessee is given below.

"As per Rule 2 (l) of the Cenvat Credit Rules,2004 Input Service includes services used in relation to setting up, modernization, renovation or repair of a factory, premises of provider of output service or an office relating to such factory or premises."

Please give the specific case law in which service tax credit on construction of factory Building/office premises was allowed.

Thanks & Regards

CA Nikhil Bhansali

CA Nikhil Bhansali (Expert)
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26 June 2012 Dear Ravi,
In the amended definition of ‘input service’ the words “for setting up” and “activities relating to business” were omitted. From the revised definition of input services, the querist is not entitled to avail any CENVAT credit of input services with effect from 01.04.2011, inasmuch as all these input services are only in relation to setting up of a premises of provider of output service. Hence, the question of availing the input services provided by the service providers and consumed for setting up of the factory does not arise from 01.04.2011, i.e., the date from which the ‘input service’ definition has been amended by the Government.

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