2020 (3) TMI 262 - AT - Service Tax

Tribunal ruling on cenvat credit eligibility for input services in property construction

Exora Business Parks Pvt Ltd, Prestige Garden Constructions Pvt Ltd Versus Commissioner Of Central Tax, Bangalore North, Commissioner of Service Tax Bangalore Service Tax- I

The Tribunal held that input services like management consultancy, civil engineering, and interior decoration used in constructing immovable property for ... CENVAT Credit - input services - input services utilized admittedly in construction of commercial complexes which have been let out and appellants have paid service tax under the head ‘renting of immovable property service’ - HELD THAT:- The issue herein is no longer res integra and has been decided in favour of the appellants by a catena of judgments by this Tribunal and also by Hon’ble Gujarat High Court in the case of COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS MUNDRA PORT & SPECIAL ECONOMIC ZONE LTD. [2010 (5) TMI 483 - GUJARAT HIGH COURT] and this judgment has been followed by this Tribunal consistently. Accordingly, these appeals are allowed and the impugned orders set aside to the extent it disallowed the CENVAT credit for input services utilized in construction of immovable property which have been further let out for the period upto 31.03.2016. Issues involved:Eligibility of cenvat credit on input services utilized in construction of commercial complexes let out under the service 'renting of immovable property.'Analysis:In appeal No. ST/22675/2014, M/s. Prestige Garden Constructions Pvt. Ltd. availed cenvat credit on input services like management consultancy, civil engineering, and interior decoration for constructing immovable property let out for rent. The issue was whether these input services had a nexus with the output service of renting immovable property. The Tribunal found that the input services did not have a direct link with the output service and were ineligible for cenvat credit under the CENVAT Credit Rules, 2004. The appellant was held to have contravened the rules, and the wrongly availed credit was deemed recoverable.In appeal No. ST/22674/2014 by M/s. Exora Business Parks Pvt. Ltd., the appellant claimed cenvat credit on various input services used in constructing immovable property. The Tribunal noted that as the immovable property was neither a service taxable under service tax nor goods liable to excise duty, the input services did not qualify as input for taxable output services. The credit taken by the appellant was considered irregular, and show-cause notices were issued. The Tribunal found the credit disallowed was appropriate as the input services were not used in providing taxable output services.Both appellants were directed to deposit a statutory amount, which they challenged in the High Court. The High Court directed the Tribunal to decide the appeals on merits without insisting on pre-deposit. After considering the contentions, the Tribunal referred to previous judgments in favor of appellants and set aside the orders disallowing cenvat credit for input services used in constructing immovable property let out for rent until 31.03.2016. The appellants were instructed to provide a calculation sheet and invoice details for verification. The credit for such services was deemed ineligible after 01.04.2011 due to a change in the definition of input services under Rule 2(l). The Tribunal upheld demands confirmed on other issues as accepted and paid by the appellants.