Ad-Free CAclubindia and daily updates on your mobile. Subscribe Now!

Service tax credit on labor charges

Ashish Shah (Senior General Manager) (58 Points)

11 March 2012

Hi,

One of our Consultant (Civil Consultant) is providing us the service of documentation of application & other procedures for MIDC land. He raises Consultancy invoice & charges Service tax. We claim this Service tax as Cenvat credit & utilse the same in Excise (since ours is a manufacturing concern) The Consultant's ST Registration is as "Business Auxiliary Services"

The same Party was also given contract for certain Labor jobs like Sand Filling, JCB etc on the newly purchased land. He charges Service tax on the said activity.

Can we claim Service tax credit of this amount charged on the Labor bills of the said Party having ST registration under "Business Auxilliary Services"??

Please let us know.

Thanks

Ashish

Reply
Follow
Share

1 Replies

Rakshit (practising) (338 Points)
Replied 11 March 2012

[(l) “input service” means any service, -

(i) used by a provider of taxable 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; but excludes services,-

(A) specified in sub-clauses (p), (zn), (zzl), (zzm), (zzq), (zzzh) and (zzzza) of clause (105) of section 65 of the Finance Act (hereinafter referred as specified services), in so far as they are used for -

(a) construction of a building or a civil structure or a part thereof; or

(b) laying of foundation or making of structures for support of capital goods,

except for the provision of one or more of the specified services; or

(B) specified in sub-clauses (d), (o), (zo) and (zzzzj) of clause (105) of section 65 of the Finance Act, in so far as they relate to a motor vehicle except when used for the provision of taxable services for which the credit on motor vehicle is available as capital goods; or

(C) such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee;]

As per the above definition,you are not allowed to take credit even on services of documentation.Credit is also not available on the services on which you raised the query.

Advocate Raksh*t Verma,09810525780

1 Like