One of the Limited company is getting the rent from immovable property as manner
Rent Rs.180 Per sq eet
Maintenance Charges Rs. 40 per sq feet and total comes to Rs.220 per sq feet plus service tax @12.36%
Input Credit was on these services
1) AMC 2) Cleaning Expenses (House Keeping) 3) Security Guard
Whether Credit of all three expenses can be taken on whole service tax payable (on 180+40 =220 *12.36% =27.19) or we have to segregate the availment only against service tax payable on maintenance charges i.e (40*12.36% = 4.94)
Kindly give your valuable opinion.
Thanks & regards
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In our view,
Service tax is payable on gross amount charged to service provider. That means ST would be payable on Rent Rs 180 plus Maintainance charges Rs. 40 total Rs. 220.
Regarding cenvat credit on input services, As per Rule 21 (i) of Cenvat Credit Rule, 2004, any taxable service received by an output service provider and used by him directly for providing the output service will be covered under input credit. In our view, if above taxable services of AMC, cleaning expenses and security guard used directly as above then you will get all services input tax credit.
Also you will get deduction of property tax from the amount of rent before charging service tax on proportionate basis.
This view is subject to detailed facts & circumstances. We are not bind by above view. This can changed on detailed review.
As per Rule 2(l) of CCR, 2004, input service means used by a provider of output service for providing an output service. In your case, apart from maintenance of th premises, Cleaning expenses and Security expenses have a direct nexus to the renting service in question. Possibly, the cleaning and security obligations are part of the agreement between you and tenant. Since all the three services are required for providing the output service, you can certainly avail cenvat credit of all the three expenses for discharging the service tax liability on renting of that property.