2019 (4) TMI 1007 - AT - Service Tax

Tribunal grants Cenvat credit for mall construction, penalties set aside, pre-deposit refund ordered

Entertainment World Developers (Private) Ltd., Nanded Treasure Bazar Private Limited, Ujjain Treasure Bazar Pvt. Ltd. Versus Commissioner, Central Excise & Service Tax, Indore

Entertainment World Developers (Private) Ltd., Nanded Treasure Bazar Private Limited, Ujjain Treasure Bazar Pvt. Ltd. Versus Commissioner, Central Excise ... Issues Involved:1. Eligibility for Cenvat credit on inputs, capital goods, and input services used in the construction of malls.2. Availability of original invoices for claimed Cenvat credit by M/s EWDPL.3. Liability to pay service tax on reverse charge basis for GTA service received by M/s NTBPL.4. Invocation of the extended period of limitation.5. Imposition of penalties under relevant sections.Detailed Analysis:1. Eligibility for Cenvat Credit on Inputs, Capital Goods, and Input Services:The appellants engaged contractors for constructing shopping malls and provided raw materials like steel, cement, and glass. They claimed Cenvat credit on these inputs and capital goods, arguing that they were used for providing taxable output services such as renting of mall spaces and common area maintenance (CAM). The Tribunal held that the appellants were entitled to Cenvat credit on inputs, capital goods, and input services used during the construction of the malls for providing output services, as per the pre-2011 definition of input services under the Cenvat Credit Rules. This decision was supported by several precedents, including the Andhra Pradesh High Court's ruling in Sai Sahmita Storages (P) Ltd.2. Availability of Original Invoices for Claimed Cenvat Credit by M/s EWDPL:In the case of M/s EWDPL, there was a dispute over Cenvat credit of Rs. 54,53,290/- due to the unavailability of original invoices. The Tribunal did not specifically address this issue in the provided text, but the general principle upheld was that if service tax was paid and the services were used for providing taxable output services, Cenvat credit should be allowed.3. Liability to Pay Service Tax on Reverse Charge Basis for GTA Service Received by M/s NTBPL:M/s NTBPL faced a dispute regarding their liability to pay service tax of Rs. 54,545/- on reverse charge basis for GTA services. The Tribunal's decision on this specific issue was not explicitly detailed in the provided text, but the general implication was that if the service tax was applicable and paid, the credit should be allowed.4. Invocation of the Extended Period of Limitation:The appellants argued against the invocation of the extended period of limitation, stating that all relevant facts were disclosed to the department, and regular audits were conducted. The Tribunal found merit in this argument, noting that the department was aware of the activities and Cenvat credit claims through filed returns and audits. Therefore, the extended period of limitation was not justified.5. Imposition of Penalties:The Tribunal set aside the penalties imposed under Rule 15 of the Credit Rules and Section 78 of the Finance Act. The rationale was that there was no suppression of facts by the appellants, and the department was fully aware of the Cenvat credit claims through regular disclosures and audits. The Tribunal referred to the Supreme Court's judgment in Anand Nishikawa Co. Ltd. to support this decision.Conclusion:The Tribunal allowed the appeals, granting the appellants the benefit of Cenvat credit on inputs, capital goods, and input services used in the construction of malls. The penalties imposed were set aside, and the extended period of limitation was not invoked. Additionally, the Tribunal directed that any pre-deposit made by M/s Indore Treasure Island Pvt. Ltd. on behalf of M/s EWDPL should be refunded to M/s Indore Treasure Island Pvt. Ltd.