2020 (3) TMI 755 - AT - Service Tax

Tribunal grants partial appeal, allows CENVAT credit for commercial complex pending verification. Emphasizes thorough verification process.

M/s City View Bangalore Properties Pvt Ltd (Now Known as Embassy One Developers Pvt. Ltd.) Versus Commissioner Of Central Tax, Bangalore North

The Tribunal allowed the appellant's appeal in part, permitting CENVAT credit for constructing a commercial complex, pending verification of its ... CENVAT Credit - input services - Works Contract - Transport of Goods by Road - Architect Services - Consulting Engineer Services - Management Consultancy Services - It appeared to Revenue that during the period from October 2007 to September 2010, as the project was under construction stage, and hence there was no output service (of renting) rendered during that period - HELD THAT:- The issue of availability of CENVAT credit, for construction of commercial complex which is meant for commercial activity and for earning rent, taxable under the provisions of Finance Act, 1994, is decided in favour of the assessee, in the aforementioned rulings, the appellant/assessee is held entitled to CENVAT credit. In the interest of justice, the matter is remanded for the limited purpose of verification of the commercial nature, which shall be verified from the Plan approved by the ‘Town Planning Authority’ and other facts (actual user for commercial purpose) as may be led before the Adjudicating Authority - appeal allowed by way of remand. Issues: Availability of CENVAT credit for construction of a commercial complex, verification of commercial nature for earning rent, change of company name during appeal.Analysis:1. Availability of CENVAT Credit: The appellant, a real estate developer, was providing various output services and registered with the Department since 2008. The Revenue disallowed CENVAT credit during the period from October 2007 to September 2010, as there was no output service rendered due to the construction stage of the project. The appellant contended that they were engaged in developing blocks for commercial and residential use, with some units sold or rented after completion. The restriction on CENVAT credit for construction services came into effect from April 1, 2011, as per Rule 2(l) of CCR, 2004. The appellant relied on previous tribunal rulings and high court cases to support their claim for allowing the appeal with consequential benefits.2. Verification of Commercial Nature: The Tribunal considered the rival submissions and the impugned order. It was held that the issue of availability of CENVAT credit for the construction of a commercial complex meant for commercial activity and earning rent, taxable under the Finance Act, 1994, was decided in favor of the assessee based on previous rulings. However, to ensure justice, the matter was remanded for verification of the commercial nature, including checking the plan approved by the Town Planning Authority and other evidence of actual commercial usage. The Tribunal clarified that the remand was only for arithmetical calculation purposes, allowing CENVAT credit upon verification as directed. The appeal was allowed in part and remanded in part for re-calculation of the admissible CENVAT credit by the original Adjudicating Authority.3. Change of Company Name: The appellant's company name changed to 'Embassy One Developers Pvt. Ltd.' during the appeal process. The Tribunal directed the Registry to reflect the new company name after the appellant's name and granted the counsel liberty to make the necessary entry in the Appeal Memo on the same day.In conclusion, the Tribunal's judgment favored the appellant regarding the availability of CENVAT credit for the construction of a commercial complex, subject to verification of the commercial nature. The decision highlighted the importance of ensuring justice through proper verification processes, remanding the case for re-calculation of the admissible credit. Additionally, the Tribunal addressed the change of company name during the appeal, directing the necessary updates to be made in the records.