One of my client is providing renting of immovable Property services i.e. shops and showrooms have been given on lease/rent. My issues is regarding availment of Cenvat Credit on input services i.e.:
(i) Can Cenvat Credit be availed on input services while constructing mall and utilizing the same for payment of service tax in respect of Renting of Immovable Property services provided by us?
(ii) Can any type of Cenvat Credit be availed on input services in respect of providing the Renting of Immovable Property services; though Board circular says Cenvat Credit cannot be availed in respect of Renting of Immobavle services.
Though my view is also that we cannot avail Cenvat Credit on input services in respect of Renting of Immovable services.
Your quick response with some judgdement against/favour will be appreciated.
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1. Cenvat credit on construction services is excluded from the definition of input services with effect from 1.04.11 (Ref Rule 2(l) ii B of Cenvat Credit Rule,)
2. As per Board Circular No 98/01/2008-ST dated 04/01/2008,Input credit of service tax can be taken only if the output is a ‘service’ liable to service tax or a ‘goods’ liable to excise duty. Since immovable property is neither ‘service’ or ‘goods’ as referred to above, input credit cannot be taken.
Constitutional validity of the above Circular can be challenged before Court. Departmental Officers are bound by Circular only. There are several judgements on this including that of SC - UOI Vs. Arviva Industries India Ltd (2007 (1) TMI 6 - SUPREME COURT OF INDIA) = 2007 (209) ELT 5 (SC)
Thanks for your reply,
* May I know whether the amendment in Cenvat credit rules in respect of credit regarding input service on construction services excluded from the definition of input services with effect from 1.04.11 is resprospective or from 1.4.11 onwards.
* If an assessee has taken credit in 2010, can he utilize the same after 1.4.2011 for paying service tax on Renting of Immovable Property services.
The exclusion of construction services, rent a cab, catering services etc is for those services rendered from 1.04.11 as clarified by the Board. Prior to that period, such credits are eligible for a manufacturer or service provider. But if a person is providing the service of Renting of immovable property, credit on construction service is not eligible right from the beginning since Renting is not treated as Output service as per the Circular dated 4.01.2008