Jv of builders and cenvat credit

Two builders have formed an unincorporated JV for construction of building project. Agreements with buyers are made in the name of JV and service tax is paid to Govt by JV on sale of flats SINCE  JV is person for service tax purposes.

However as per JV agreement the said JV is only a revenue sharing JV and accordingly costs of construction and revenue from sale of flats are accounted for in the books of individual builder partners in the agreed ratio specified in JV agreement.

Accordingly all service bills are accounted for and paid by builder partners, though credit for input service tax is claimed by JV in service tax returns against tax payable on sale of flats.

This claim is being made on the basis of JV provision according to which costs are incurred by builder partner by way of an obligation as a JV partner for construction and hence related service tax payments made are treated as effective payments on behalf of JV.

Views are sought on correctness of CENVAT credit claim by JV when bills are in the name of builder partner and no accounting is made in the books of JV for costs and revenue.

CA M B Abhyankar

Replies (1)
According to provisions JV and JV partners are treated as separate persons and I believe u have accepted it and thus paid sertax through JV. Hence it shall be taken as distinct persons for all purposes including CENVAT. CENVAT credit shall be taken only on the basis of specified documents I.e. rule 9. Hence if input service received under invoices paid by and incurred by JV partners then credit therepf cannot be taken by JV.

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