SERVICE TAX CREDIT ON CONSTRUCTION OF BUILDING

Dear Sir,

The 67% of abatement matter is related to your contractor. He avails the benifit under notification no. 1/2006 dated 01.03.2006 (as amended) subject to the condition ' no cenvat credit on inputs, input services and capital goods should not be used'. And he is paying the service tax on 33% of the service value.

As far as you are concerned, you are the receipent of construction service in relation to your factory building, and the service covers under input service. Hence you can avail the CENVAT credit on the same. It is immaterial to you whether your contractor getting abatement benifit or not.

In my view Mr. Arya + Mr. Dineesh both of their view is correct.

The credits can be of 3 types - capital goods - inputs and input services.

Construction services is an input service which is eligible as long as the service is used for provding the taxable service or manufacture of excisable goods. Construction service is also one of the 16 specified services where 100% credit is available if taxable and non taxable/ exemt services are provided.

The availing of the abtement is for the service provider and it is an aspect which has nothing to do with availment of credit. Whatever the ST paid by the serviuce provider the credit for the same is available as long as it is eligible.

What is the better option from :

construction of Pre Engg. building  on  works contract

construction of Pre Engg. building  bi distributing supply part and erection par.

regds.

Madhusudana Reddyt