Tribunal grants cenvat credit for construction services, citing DLF case

The Tribunal allowed the appeal, setting aside the denial of cenvat credit on input services used for construction activities. It held that services used for construction leading to taxable output services qualified for cenvat credit, citing a precedent involving DLF Cyber City Developers Ltd. The Tribunal emphasized that input services related to setting up, modernization, and renovation of premises for output services fell within the definition of cenvat credit. As a result, the appellant was entitled to avail cenvat credit, and the impugned order denying the credit was overturned with any necessary relief granted.

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Issues involved:
Appeal against denial of cenvat credit on input/input services in construction activity.

Analysis:
The appellant, engaged in construction activities, appealed against the denial of cenvat credit on input services used for construction of commercial, industrial, and residential premises. The revenue contended that since the constructed premises were immovable, they did not qualify as goods/capital goods. The matter was adjudicated, leading to the confirmation of service tax demand, denial of cenvat credit, imposition of interest, and penalty.

The appellant argued that a previous case involving a sister concern had allowed cenvat credit, thus asserting their entitlement to the credit. Upon hearing both parties, the Tribunal referred to a previous case involving DLF Cyber City Developers Ltd., where it was established that inputs, capital goods, and input services used for providing output services, such as renting of immovable property services, allowed for cenvat credit. The Tribunal emphasized that services used for construction activities leading to the provision of taxable output services qualified for cenvat credit. It noted that the definition of input services under the Cenvat Credit Rules encompassed services related to setting up, modernization, and renovation of premises for output services.

The Tribunal reaffirmed that any inputs, capital goods, or input services used for providing output services, including renting of immovable property services, entitled the assessee to avail cenvat credit. Consequently, the impugned order denying cenvat credit was set aside, and the appeal was allowed with any consequential relief deemed appropriate.

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