Tribunal allows CENVAT Credit on financial services for property rent, but interest due for late tax payment.

The Tribunal held that CENVAT Credit on banking and financial services used in providing Renting of Immovable Property service is admissible. However, the appellant was required to pay interest at a rate of 24% on the belatedly paid service tax amount due to failure to provide supporting invoices. The judgment modified the order, allowing the CENVAT Credit and confirming the interest rate, resulting in the appellant being liable to pay a total interest of Rs. 17,38,094/- after adjustments.

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Issues involved:
The issues involved in the judgment are (i) whether CENVAT Credit is admissible on banking and financial service used in providing Renting of Immovable Property service; and (ii) the appropriate interest rate for belated payment of service tax.

Issue 1: CENVAT Credit on banking and financial service:
The appellant, engaged in providing taxable services, availed CENVAT Credit on banking and financial services used in providing Renting of Immovable Property service. The appellant argued that the service falls under the definition of 'input service' as per Rule 2(l) of the Cenvat Credit Rules, 2004. The appellant cited relevant judgments to support their claim, emphasizing that CENVAT Credit on input services for Renting of Immovable Property service is admissible. The Tribunal agreed with the appellant, holding that the CENVAT Credit availed on banking and financial services for providing Renting of Immovable Property service is admissible.

Issue 2: Interest rate for belated payment of service tax:
Regarding the demand for differential interest on the belated payment of service tax, the department alleged that the appellant collected rent along with service tax but failed to deposit the service tax on time. The appellant disputed this allegation but failed to provide invoices during the hearing to support their claim. As a result, the Tribunal found no merit in the appellant's contention and upheld the department's claim for interest at 24% on the belatedly paid service tax amount.

The judgment modified the impugned order, ruling that the CENVAT Credit of Rs. 13,77,515/- is admissible, leading to the setting aside of penalties and levied interest. Additionally, it confirmed the interest rate of 24% for the relevant period, requiring the appellant to pay a total interest of Rs. 17,38,094/- after adjusting any earlier payments. The appeal was disposed of accordingly on 12.10.2023.

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