Cenvat Credit Availment

Respected Sir,

We have client whose company is in process of construction, they will provide services only after completion of construction. But they have registered the company under Service tax just for availing input credit without having any present Output liability.

The respective expenses are capitalized but service tax part of expense is availed as cenvat credit.

Please advise whether the company can accumulate the input(Cenvat) credit for future output liability.Please advise with reference to any Section/Rule?

Replies (6)

in my opinion, you cannot avail cenvat credit because as it seems that the asset in question is not covered under the definition of Capital Goods as defined in Rule 2(a) of Cenvat Credit Rules,2004

Capital goods used for construction of building do not qualify for cenvat credit . But  machinery or similar assets to be used for providing taxable services are eligible for credit. Input services in connection with setting  up was admissible till 31-03-2011. As per the amended definition effective from 01-04-2011this stands excluded from the scope of input services.

as the input services are construction related and it does not qualify as input service for output service of rent, so input credit is inadmissible

If the services can be classified as input services as per Rule 2, then as per rule 4(7) of CENVAT credit rules, CENVAT credit in respect of input service shall be allowed,on or after the day which payment is made of the value of input service and the service tax paid or payableas indicated in invoice.

It is important to know as to whether they would be manufacturing excisable goods or provdingn taxable services.

If so they may register themsleves and start availing the credit based on eligiblity.

Additionally the revised definition excludes the construction activity as mentioned by Niar. See article on cenvat credit in articles section.

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
Featured 29 October 2026
Accounts Executive

Synergy Keystone

Chennai

B.Com

View Details
Company
30 October 2026
Asst Manager Accounts

Goodwin Pumps India Pvt Ltd

Chengalpattu

CA Inter

View Details
Company
19 October 2026
Accountants/Articles (Freshers/Experienced)

ADY & CO.

New Delhi

Graduate (Any)

View Details
Company
ARTICLESHIP 23 October 2026
Articled Trainee

J Y & CO

Hyderabad

CA Inter

View Details
Company
08 October 2026
Account Executive

Elite Taxation

New Delhi

CA Foundation

View Details
Company
14 October 2026
Accountant

Rize.farm

Bengaluru

B.Com

View Details
Company
08 October 2026
SALES TELECALLER

HIRE NOVA

Lucknow

Graduate (Any)

View Details
Company
31 October 2026
Accountants

sankaran and krishnan

New Delhi

B.Com

View Details