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TMI BlogService tax creditX X X X Extracts X X X X X X X X Extracts X X X X ..... Dear Members and professionals We are constructing a Five star Hotel and we may be starting the operation probably from 2013 jan onwards. During the construction time we engage somany consultants(both indian and foreign) and contractors and other people whoever required for completion of construction. We pay so much of service tax to them through their bills. The question is can we accumulate this service tax paid during the period of construction and use that during operation of hotel against the liablity of service tax i.e, can we take Cenvat credit now and accumulate and carrie forward and utilise after commencing the operation. A clear clarification is solicited. - Reply By pradeep khatri - The Reply = Dear Sir, Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... struction of a building or a civil structure or a part thereof: - Not eligible if used for construction of a building or a civil structure or a part thereof, or laying of foundation or making of structures for support of capital goods. If the service is used for other purposes, e.g. finishing services, repair, alteration or restoration, these should be eligible. Thanks and Best Regards, Pradeep Khatri - Reply By RADHAKRISHNA KOPPARAPU - The Reply = thanks Mr.pradeep for your clarification. If you can give any case law reference or notification or circular reference it would have been more good. anyhow thanks. - Reply By pradeep khatri - The Reply = Dear Sir, Kindly go through the CENVAT credit definition as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amended in Budget ,2011. You will find the answer. Best Regards, Pradeep Khatri - Reply By NEERAJ KUMAR, RANCHI - The Reply = Yes you can take such credit accumulate it and pay when you are required to pay, for this what you need is to get yourself registered with service tax. I believe you are talking about input service credit. In my view there is no problem and you are eligible for it as per provisions. What you are dealing in doesnot require laying of foundation for support of capital goods in fact it is applicanle for manufacturers of central excise. So I think you can go on. - Reply By RADHAKRISHNA KOPPARAPU - The Reply = thank you neeraj but you are saying entirely opposite to Mr.pradeep clarification. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I am confused again. Mr.pradeep will reply to your answer if i am right - Reply By Surender Gupta - The Reply = If you read the meaning of Input services under rule 2(l) of the Cenvat Credit Rules, 2004 (as amended) you will find the restrictions imposed by the legislature on availing cenvat credit on construction activity. Therefore, I agree with the views of Mr. Pradeep Khatri. - Reply By NEERAJ KUMAR, RANCHI - The Reply = With due respect to all the experts I would like to mention that you can take cenvat credit of the input services except the service which are specified to be excluded in CENVAT credit rules 2, which includes architect, port services, works contracts etc. So I would differ from the advice of the these t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wo learned experts, what they have told is correct but not in full. - Reply By sv bhasker - The Reply = Sir , If I am not additing to your confusion, it appears to me that if u get your hotel constructed say by X,who is providing commercial or industrial complex service (zzq) to you and pays applicable service tax . In this case,you are not allowed credit because of the exclusion of input service (zzq) from the definition of input sevice and treating the said service as exempted service if abatement is claimed . However, if you construct hotel yourself with the help of other service providers like say man power suppliers and architect, you may be eligible for credit of service tax paid on man power supply , but not on architect service a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s it is excluded . So eligibilty depends on the nature of input service used. Inclusive definition of input service, gives a clue that services relating to(setting up deleted from (1.3.11 ) modernization , repair of the premises /office of the output service provider are eligible for credit.. Does one equate construction with setting up? and deny credit altogether. Any views please. - Reply By RADHAKRISHNA KOPPARAPU - The Reply = Dear bhaskar thanks for the reply. We are constructing the hotel on our own by appointing different contractors like civil,labour,iterior and consultants indigenous and foreign wherever it is required. We get bills from the above said contractors as well as consultants indigenous including service tax at app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licable rate. And for foregin consultants we pay applicable service tax to government directly. And pl note that we reimburse certain expenses incurred by them for travel etc also to the both consultants. Is there any service tax liability on this also. I am getting different opinions, hence i put the matter here. I think now it is clear to you and you may advise clearly what i can do. - Reply By sv bhasker - The Reply = Reimbursement of travel expenses etc paid to the service provider are includable in the value of taxable service for the purpose of taxation. Please read Rule 5 of Service Tax(Determination of Value) Rules,2006. In this case service provider is not acting as pure agent. Please see the following given under the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Rule. Illustration 2. In the course of providing a taxable service, a service provider incurs costs such as traveling expenses, postage, telephone, etc., and may indicate these items separately on the invoice issued to the recipient of service. In such a case, the service provider is not acting as an agent of the recipient of service but procures such inputs or input service on his own account for providing the taxable service. Such expenses do not become reimbursable expenditure merely because they are indicated separately in the invoice issued by the service provider to the recipient of service - Reply By RADHAKRISHNA KOPPARAPU - The Reply = Thanks Mr.Bhaskar - Service tax credit - Query Started By: - RADHAKRISHNA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... KOPPARAPU Dated:- 3-9-2011 Service Tax - Got 11 Replies - Service Tax - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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