DYKS

15 Shares
facebook sharing button Share
twitter sharing button Tweet
email sharing button Email
sharethis sharing button Share
linkedin sharing button Share
21 Jun 2016

CENVAT eligibility of Works Contract Service

Recently CESTAT of Mumbai in the case of Red Hat India (P.) Ltd. v. Principal Commissioner of Service Tax, Pune (2016) 70 taxmann.com 132 has held that Works Contract Services used for maintenance of office equipment and building is not excluded from definition of input service and hence, same is eligible for input service credit.

In the given case assessee availed credit of 'works contract services' used for maintenance of photocopier, computer and building premises of assessee. The Department rejected the refund of works contract service only on the ground that the said services is excluded from the definition of the input service under Rule 2(l) of Cenvat Credit Rules, 2004.

Sub-clause (A) of Rule 2(l) reads as follows:

(A) service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as specified services) in so far as they are used for—

(a) construction or execution of works contract 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

As per given provisions it can be seen that works contract Services are excluded only when it is used for construction service, whereas in given case it is for maintenance of various equipment and building and not for construction. Therefore it does not fall under the exclusion category in definition of input service and hence, works contract service is input service.