Input service tax for construction services

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Querist : Anonymous

Querist : Anonymous (Querist)

11 April 2013 A person is engaged in construction of building and selling of these blocks. He receives advances for the blocks booked and he pays the service tax thereon. My question is, can he claim input credit of service tax paid on expense, like audit fees?
If no, then kindly let me know the reason for not claiming the input credit or any relevant notification relating to it.

CA. RAVIKUMAR

CA. RAVIKUMAR (Expert)
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11 April 2013 If you read sub rule l of Rule 2 of cenvat credit rule 2004,
Exclusion is with respect of construction services with some other criteria to be considered where as in the same rule audit fee and other expenses related St is specifically included hence as per my view you can claim the St paid on Audit fee,

Querist : Anonymous

Querist : Anonymous (Querist)

12 April 2013 Sir
The rule says 'used by a provider of taxable service for providing an output service' the audit fees is not essential for the assessee to provide the output service. Still can we take its service tax credit?

Querist : Anonymous

Querist : Anonymous (Querist)

12 April 2013 Also sir, in any case where the advances are returned for eg. Rs. 100 was received and Rs. 3 was paid as the service tax thereon. While cancellation of the block Rs. 75 was repaid to him and Rs. 25 was transferred to block cancellation thus not repaid. The question is that is the assessee liable to pay service tax on Rs. 25 which he did not repay?

CA. RAVIKUMAR

CA. RAVIKUMAR (Expert)
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13 April 2013 Rule as follows
"input service" means any service,—
(i) used by a provider of 13a[output service] for providing an output service; or
(ii) used by a 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 modernisation, 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, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal;

CA. RAVIKUMAR

CA. RAVIKUMAR (Expert)
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13 April 2013 The rule in (i) is about direct nexus to output and i you read the rule carefully it says includes it means the services mentioned are included even though they are not directly related to your output ST.

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Querist : Anonymous

Querist : Anonymous (Querist)

15 April 2013 Sir, my another question regarding the payment of service tax on the returned amount is still un resolved. can please help on that also.

CA. RAVIKUMAR

CA. RAVIKUMAR (Expert)
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15 April 2013 As per my understanding and knowledge you need to pay ST on cancellation charges i.e on Rs 25 in your case.
Because as per the new negative list concept other than negative list all services are taxable.
cancellation charges is collected because you have rendered some services but not accepted hence ST is applicable.

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