Meaning of setting up factory in input servcie under cenvat credit rule, 2004, Service Tax

[Krishan Gopal]

Dear Sir,

Please advise; meaning of setting up factory in the definition of input services under cenvat credit rules, 2004 before 31 March, 2011, whether it includes civil work, electrical work and mechanical work for construction of a factory, if Yes ! than what would be the impact of "circular no.98/1/2008-st dated 04-01-2008" which states that  input service tax credit on construction of immovable property  can be taken only if the output is a "Service" liable to service tax on renting of immovable property.

Query: Whether civil work, electrical work and mechanical work for construction of a factory (where goods are manufactured and excise duty is paid thereon) would be covered under construction of immovable property and input tax credit will be disallowed as per aforesaid circular as we are not  renting the aforesaid factory(immovable property). 

K.Gopal-9911052902

Posts / Replies

[MANDAVILLI RAMAKRISHNA]

service tax paid on the value of immovable properties other than plant and machinery is not eligible for cenvat credit same as central excise duty paid on the building materials purchase like cement etc.,