Tribunal allows Cenvat credit for construction services used in providing output services

The tribunal set aside the impugned order denying Cenvat credit on Commercial and Industrial Construction Service for various output services availed by M/s Creative Infocity. The tribunal held that construction services were eligible for credit for providing output services like renting immovable property. The matter was remanded to the adjudication authority for fresh consideration, specifically to examine the admissibility of credit for other output services provided by the appellant.

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Issues:
Admissibility of Cenvat credit on Commercial and Industrial Construction Service for various output services.

Analysis:
The appeal was filed against the denial of Cenvat credit by M/s Creative Infocity for services used in the construction of their premises for different output services. The appellant availed Cenvat credit for services like Banking and Financial Services, Goods Transport Agency Service, Renting of Immovable Property Service, Management and Maintenance and Repair Service, and Sponsorship Service. The denial was based on the argument that these services did not directly relate to the construction services used. The adjudicating authority confirmed the demand, imposed interest, and penalty, leading to the appeal before the tribunal.

The appellant's counsel argued that previous tribunal decisions supported the eligibility of Cenvat credit for Commercial and Industrial Construction Service for output services. They relied on cases like DYMOS INDIA AUTOMOTIVE PVT LTD, NAVARATNA S.G HIGHWAY PROPERTY PVT. LTD., and LAXMI TECHNOLOGY INDIA LTD. The definition of input service was also highlighted to support the claim that the construction of the complex amounted to setting up the appellant's premises.

The Authorized Representative cited other cases to argue that only goods could qualify as capital goods, asserting that buildings did not fall under this category. However, the tribunal examined the issue and referred to the decision of the Hon'ble High Court of Madras in the case of DYMOS INDIA AUTOMOTIVE PVT LTD. The court's observation supported the view that construction service is eligible for credit for providing output service of renting immovable property. The tribunal found the conclusion well-founded and upheld the decision.

Regarding the reliance on other decisions, the tribunal noted the differing views in cases like Vodafone Mobile Services Limited and highlighted that the facts in those cases were distinct from the present matter. The tribunal also addressed the issue of the Renting of Immovable Property Service coming into existence from 01.06.2007, stating that credit for Commercial and Industrial Construction Service before this date was not allowable. However, credit for services availed after this date was admissible.

The tribunal further analyzed the admissibility of credit for output services other than Renting of Immovable Property Service, noting that this aspect was not raised before the lower authorities. As a result, the impugned order was set aside, and the matter was remanded to the original adjudicating authority for fresh consideration, emphasizing the need to examine the admissibility of credit for other output services provided by the appellant.

In conclusion, the impugned order was set aside, and the matter was remanded to the adjudication authority for further review and consideration in light of the observations made during the tribunal proceedings.

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