2014 (9) TMI 35 - AT - Service Tax

Tribunal permits CENVAT credit for property rental services

M/s. Laxmi Enterprise Versus Commissioner of Central Excise & ST., Vadodara

M/s. Laxmi Enterprise Versus Commissioner of Central Excise & ST., Vadodara - TMI Issues involved:Admissibility of CENVAT credit on inputs, capital goods, and input services used for creating immovable property for renting services.Detailed Analysis:Issue 1: Admissibility of CENVAT credit on inputs and input services for immovable property creation:The case involved a dispute regarding the admissibility of CENVAT credit on inputs, capital goods, and input services used for creating immovable property for renting services. The Adjudicating authority initially held that such credit would be admissible as the inputs and services were used in creating a property for providing output services of renting immovable properties. However, the Commissioner Central Excise & Customs, Vadodara-II, in the Orders-in-Revision, contended that immovable property is neither service nor goods, citing a CBEC Circular. The appellant argued that credit should be allowed based on precedents like Navratna S.G. Highway Prop. Pvt. Limited case.Issue 2: Interpretation of input services for CENVAT credit eligibility:The appellant relied on various case laws to support the admissibility of CENVAT credit on input services used in the construction of immovable property for renting services. The Revenue argued that since immovable property is not goods or services, the credit on inputs and services used in its creation should not be allowed. The appellant contested this argument by referring to Rule 2(l) of the CENVAT Credit Rules, emphasizing that the inputs and services were used for providing an output service, making them eligible for credit.Judgment:After considering the arguments and case records, the Tribunal observed that the issue of admissibility of CENVAT credit on inputs and input services for creating immovable property had been settled in previous cases. The Tribunal referred to the definition of inputs and input services under the CENVAT Credit Rules and concluded that the inputs and services used in the construction of the property were essential for providing the output service of renting immovable properties. The Tribunal cited precedents and held that the appeals filed by the appellant were required to be allowed, thereby allowing the CENVAT credit on inputs and services used in creating immovable property for renting services.In conclusion, the Tribunal allowed the appeals filed by the appellant, emphasizing the admissibility of CENVAT credit on inputs, capital goods, and input services used in the creation of immovable property for renting services, based on established legal principles and precedents.