22 January 2009
The cenvat credit is available for inputs used in providing the service. However the ST would have to be paid on the entire value including materials @ 12.36 % for you to be able to claim the cenvat credit of materials.
The material are not input material, they are capital assets which we rent out.
Hence my question stands whether we can take credit of service tax paid for services used in construction of capital goods. This capital assets are rented out and its a source of income to the company which is taxable.
As per given facts, lets solve the problem step by step:-
(1)First of all, you are not a manufacturer as the construction of immovable property does not amount to manufacture. Hence, you can not claim the cenvat on inputs or input services used in construction of towers.
(2)You are a service provider.
(2)(i) Now, the constructed towers are not covered by the definition of "capital goods" prescribed under rule 2(a) of CENVAT Rules, 2004.
(2) (ii) However, the input services used in constraction of towers can be covered by the definition of "Input Services" prescribed under rule 2(l) of CENVAT Rules, 2004,if you establish that this input services are used in providing of services or are included by the inclusive part of the above definition.
(refer Rule 2(l)of CENVAT Rules, 2004)
With best wishes for any clarification, please mail me at firstname.lastname@example.org