2021 (9) TMI 83 - AT - Service Tax

Tribunal remands credit quantification issue to Adjudicating Authority

The Tribunal set aside the order and remanded the issue to the Adjudicating Authority for quantifying the admissible credit. The appellant was directed to ... CENVAT Credit - Excise Duty/Additional Customs Duty (CVD) on inputs and capital goods - input services which have been used for the construction of Mall, further used/usable for providing taxable output service - HELD THAT:- Reliance placed in the case of M/S. DLF PROMENADE LTD., (EARLIER M/S. BEVERLY PARK MAINTENANCE SERVICES LTD.) VERSUS COMMISSIONER, SERVICE TAX, DELHI [2020 (4) TMI 42 - CESTAT NEW DELHI] where it was held that there is no manner of doubt that CENVAT Credit availed by the appellant on inputs, inputs services and capital goods service used for construction of the Mall, which was ultimately let out could not have been denied to the appellant. The facts of the instant case are slightly different as in the present case the appellant could not complete the construction of the mall. However, this fact should not in any way affect the admissibility of credit to the appellant as the admissibility of the credit availed prior to 01.04.2011, has been settled in principle. It is also on record that the appellant reversed the credit availed by it after 01.04.2011 and intimated the Department. The demand in instant case pertains to the credit availed by the appellant before 01.04.2011 - it is held that the appellant has correctly availed the credit on inputs and input services, the duty and tax on which has been paid by the appellant. To that extent, the impugned order is not sustainable. Credit Rules imposed certain conditions for allowing credit in terms of Rules 4 & 9 and cast certain obligations upon the assessee in terms of Rule 6. The quantum of admissibility of credit depends on satisfying the conditions imposed therein and the discharge of obligations. In such circumstances it is not possible to quantify the admissible credit at this juncture. For this limited purpose, the issue needs to be remanded to the Adjudicating Authority. The issue remanded to the adjudicating authority for quantifying the credit admissible - appeal allowed by way of remand. Issues Involved:1. Admissibility of CENVAT credit on inputs and capital goods used for the construction of a mall.2. Applicability of amended definitions of 'Input' and 'Input Service' from 01.04.2011.3. Nexus between input services availed and services provided.4. Invocation of the extended period for demand.5. Requirement of evidence for availing CENVAT credit.Detailed Analysis:1. Admissibility of CENVAT Credit on Inputs and Capital Goods:The primary issue is whether the credit of Excise Duty/Additional Customs Duty (CVD) on inputs and capital goods, and credit of Service Tax paid on input services used for constructing a mall, which is further used for providing taxable output service, is admissible to the appellants. The appellant, engaged in setting up and managing malls, availed credit on inputs like cement and steel, and input services like construction and consultancy. The Department, after an audit, issued a Show Cause Notice and confirmed recovery of CENVAT credit availed and utilized, along with applicable interest and penalty.2. Applicability of Amended Definitions from 01.04.2011:The definition of 'Input' and 'Input Service' underwent changes effective from 01.04.2011, excluding goods and services used for construction of a building or civil structure. The appellant argued that the credit availed before this date was rightfully availed, as the exclusions were not applicable then. The appellant reversed the credit availed post-01.04.2011 and informed the Department accordingly. The Tribunal referenced previous cases, including M/s Raipur Treasure Island Private Limited, supporting the appellant's position that credit availed before the amendment was admissible.3. Nexus Between Input Services Availed and Services Provided:The Department contended that the appellant was not registered for services like Construction of a Commercial Building or Complex, and thus there was no nexus between input services availed and services provided. The Tribunal, however, noted that in similar cases, it had been established that CENVAT credit on inputs and input services used for constructing a mall, which was let out, could not be denied. The Tribunal referenced DLF Promenade Limited, where it was held that credit availed on inputs and services used for mall construction was admissible.4. Invocation of the Extended Period for Demand:The appellant argued that it had been regularly filing ST-3 Returns and had not suppressed any facts, thus the extended period for demand could not be invoked. The Department claimed that there was no mention of CENVAT credit in returns filed till September 2009, and an opening balance was shown only in returns filed for October 2009 to March 2010. The Tribunal found this contention factually incorrect, noting that the appellant had disclosed credit during an audit in 2007-08, well before the issuance of the Show Cause Notice.5. Requirement of Evidence for Availing CENVAT Credit:The Department argued that the appellant had not submitted documents to establish the availability of credit. The Tribunal acknowledged that the appellant had demonstrated credit during an audit and explained the same to authorities. However, the Tribunal found it necessary to remand the issue to the Adjudicating Authority to quantify the admissible credit, directing the appellant to submit all relevant evidence within two weeks of the order.Conclusion:The Tribunal set aside the impugned order and remanded the issue to the Adjudicating Authority for quantifying the admissible credit. The appellant was directed to submit evidence for availing credit, and the Adjudicating Authority was instructed to examine the evidence and allow admissible credit, passing an order within six weeks of submission. The appeal was allowed to the extent indicated.