2017 (4) TMI 1213 - AT - Service Tax

Tribunal upholds input service credit for construction services & cenvat credit eligibility, dismisses Revenue's appeal

The Tribunal dismissed the Revenue's appeal, affirming the admissibility of input service credit for construction services and the Respondent's ... Cenvat Credit - Input service - construction services for construction of factory building - Held that: - the issue is no more res integra and is squarely covered by the judgment of Hon’ble Punjab & Haryana High Court in the case of CCE, Delhi-III Vs. Bellsonica Auto Components India P. Ltd. [2015 (7) TMI 930 - PUNJAB & HARYANA HIGH COURT], where it was held that prior to the amendment the setting up of a factory premises of a provider for output service relating to such a factory fell within the definition of ‘input service’. Input service credit - construction of boundary wall - Held that: - issue is covered in the favour of the assessee in the case of Nirma Ltd. Vs. CCE & ST, Vadodara-I [2013 (7) TMI 46 - CESTAT AHMEDABAD], where it was held that construction services utilized for establishing the factory were eligible for cenvat credit. Appeal dismissed - decided against Revenue. Issues:Admissibility of input service credit for construction services, validity of cenvat credit availed, eligibility of construction services for factory building, admissibility of cenvat credit for construction of boundary wall, verification of original documents evidencing payment of service tax.Analysis:Admissibility of Input Service Credit for Construction Services:The Revenue contended that the construction of the factory building and boundary wall was not directly or indirectly used for manufacturing excisable goods, thus making the input service credit inadmissible. However, the advocate for the Respondent cited precedents to support the admissibility of such credits. The Tribunal noted that the issue was settled by the judgment in the case of CCE, Delhi-III vs. Bellsonica Auto Components India P. Ltd. and held in favor of the Respondent.Validity of Cenvat Credit Availed:The Revenue raised concerns about the validity of cenvat credit availed by the Respondent, pointing out discrepancies in invoices and lack of evidence of service tax payment. The Tribunal observed that the invoices were amended without proper authorization, lacked clarity on the services provided, and did not demonstrate payment of service tax. The Tribunal also noted that the manner of calculating service tax did not comply with rules. However, the Tribunal found that the issue was not specific in the show cause notice and since the first appellate authority had ordered verification of original documents, the Revenue's objection was deemed unsustainable.Eligibility of Construction Services for Factory Building and Boundary Wall:The Tribunal referred to previous judgments to establish that the construction services for the factory building and boundary wall were eligible for cenvat credit. Citing the cases of CCE, Delhi-III vs. Bellsonica Auto Components India P. Ltd. and Nirma Ltd. vs. CCE & ST, Vadodara-I, the Tribunal upheld the eligibility of the Respondent to claim cenvat credit for these services.Verification of Original Documents:The Tribunal noted that the Commissioner (Appeals) had remanded the matter for verification of original documents evidencing payment of service tax, including the submission of specific invoices. The Tribunal highlighted the importance of verifying the original documents as part of the process and found that the ground raised by the Revenue regarding this issue was not sustainable.Conclusion:The Tribunal dismissed the appeal filed by the Revenue, affirming the admissibility of input service credit for construction services and the eligibility of the Respondent to claim cenvat credit for the construction of the factory building and boundary wall. The cross objections were also disposed of, concluding the matter in favor of the Respondent.End of Analysis.