CENVAT credit for mall construction services accepted as input for renting of immovable property output service.

CENVAT credit on services used for constructing a mall was treated as admissible to a provider of renting of immovable property service because the construction-related services were integral to creating the premises from which the taxable output service was provided. The applicable definition of input service under Rule 2(1)(i) of the CENVAT Credit Rules, 2004 was applied to services used for providing the output service, and credit was not denied merely because the mall was not an excisable product or service. The demand of service tax and the penalty were set aside.

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Issues: Whether CENVAT credit on services used during construction of a mall was admissible to a provider of renting of immovable property service.

Analysis: The definition of input service under Rule 2(1)(i) of the CENVAT Credit Rules, 2004 was treated as applicable to services used by a provider of taxable service for providing output service. The services taken for constructing the mall were considered integral to the creation of the premises from which the taxable renting service was subsequently provided. The Tribunal followed the reasoning that, without the construction-related services, the output service of renting the immovable property could not have come into existence, and therefore the credit could not be denied merely because the mall itself was not an excisable product or a service.

Conclusion: CENVAT credit was held admissible and the demand of service tax, along with the penalty, was set aside.

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