TaxTMI 
TaxTMI 
2013 (10) TMI 820
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....yber City Developer Ltd. ST/STAY/3944/2012 in Appeal No.ST/3090/2012-CU(DB) June, 2007 to March, 2011 277088069 196647750 34171585 507907404 501509964 6397440 M/s Galaxy Mercantiles Ltd. ST/STAY/3942/2012 in ST/3088/2012-CU(DB) 2007 to 2011 22801762 18006524 40808286 32084784 8723502 Total 667168934 244237988 36392612 947799534 664464602 283334932 3. The appellants are owners of shopping malls which consists of various shops. As the said shops are being given on rent by them they are registered with the Service Tax department as the service provider falling under the category of "renting of immovable property services", along with 'maintenance and repair services' and 'sale of space or time for advertisement services' The dispute in the present appeal relates to the Cenvat credit availed by the appellants and utilised for providing output services of 'renting of immovable property services'. The appellants have availed the credit of service tax paid in respect of various services such as security services, consultancy, house keeping, repair, maintenance and Chartered Accountant etc. as also ....
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....he Revenue is that there has to be nexus between the inputs, input services and output services for availing credit. As such, submits the learned DR that the appellants be put to some terms of deposit. 6. We have carefully considered the submissions made by both sides. The dispute can be divided into two parts i.e. (i) availability of Cenvat credit in respect of inputs/raw materials used for construction of the building by the builder, which has been further given on rent; and (ii) availability of Cenvat credit in respect of various input services used for providing output services. 7. Dealing with the first issue, we find that the adjudicating authority has denied the same by taking into consideration definition of inputs as also input services. He has observed that definition of inputs given in clause (i) of Rule 2(k), which is in relation to manufacture of final product and the definition of inputs as contained in clause (ii) which is limited to goods used for providing any output services cannot be placed on the same platform inasmuch as clause (i) refers to the definition of inputs for the purpose of excise duty whereas clause (ii) refers to definition of inputs for the ....
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.... the 'Works Contract Services', in which case, he would have decided his Service Tax liability at the higher rate and such high Service Tax paid by the 'Works Contract Services provider' would be available as credit to the appellants. However, on being questioned, learned advocate Shri V. Lakshmi Kumaran fairly agreed that the 'Works Contract Service provider has not availed the credit of these duties as paid on the inputs used by him for construction but has opted for payment of Service Tax equivalent to the amount of 2%. 8. The question which arises is that when the 'Works Contract Services provider has opted for payment of Service Tax at a lesser rate on the condition of non-availment of credit of duty paid on the inputs used for construction of building, whether the same very credit can travel to the appellants who are the recipient of 'Works Contract Services'. It is well settled law that what cannot be done directly can not be allowed to be done indirectly. In the present situation, the work contract service provider has already foregone the Cenvat credit paid on the raw materials so as to avail the credit of concessional rate of Service Tax; that foregone credit cannot tr....
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....ice provider. As such, at this prima facie stage, we find that the ratio of the above decision of the Hon'ble Andhra Pradesh High Court is not applicable to the facts of the instant case. 11. Learned advocate further draws our attention to another decision of the Tribunal in the case of Navaratana S.G. Highway Prop, Pvt. Ltd. vs. CST Ahmedabad [2012 (28) STR 166 (Tri-Ahm) wherein by following the ratio of the decision of Hon'ble Andhra Pradesh benefit stand given to the appellant. However, on carefully going through the said decision of the Ahmedabad Bench, we find that it is clear from the first three paragraphs of the said order that the dispute in that case relate to availment of credit in respect of various services used for the construction of the mall and not relatable to the inputs/raw materials used for such construction. Further, we also note from the opening paragraph of the said decision that the appellants himself was engaged in the business of construction of commercial malls and renting of space in other malls in the market. In the present case, it is admitted before us that the mall was not constructed by the appellant themselves but got constructed from a person ....
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....p; (vi) tubes and pipes and fittings thereof; and (vii) storage tank, used,- (1) in the factory of the manufacturer of the final products, but does not include any equipment or appliance used in an office; or (2) for providing output service; (k) "input" means - (i) all goods, except light diesel oil, high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly hr indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, w....
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....stand used for providing the output services. We find that the definition of input is provided in Rule 2(k), in two different clauses i.e. (i) and (ii). Clause (i) refers to the definition of inputs for the purposes of excise duty whereas Clause (ii) refers to the definition of input for the purposes of service tax. When we compare the definition of inputs as contained in the said two clauses, we note the following differences; (a) the definition of input in clause (i) refers to all goods, used in or in relation to the manufacture of final products; (b) whether-directly or indirectly (c) whether contained in the final product or not (d) used for any other purpose, within the factory of production. As is seen from the above, the definition of input as contained in clause (i) refers to all inputs either used in or in relation to the manufacture of the final product or for any other purposes within the factory of production. On the other hand the definition of inputs as contained in clause (ii) i....
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....As such, we do not agree with the ld. Advocate that such cement and steel can be held to be eligible inputs used for providing the output port service. Accordingly, confirm the demand on this count." Further the Tribunal held that the various input services would get covered under the definition of input services inasmuch as the same are used for the purpose of providing output services and are integrally connected with the port services and other warehouse and storage services. The said part of the order of the Tribunal was appealed against by the Revenue before the Hon'ble Gujarat High Court and was upheld as reported in 2011 (21) STR 361 (Guj). As such, it can be held that Tribunal's order stand merged with the Hon'ble Gujarat High Court's decision and that portion of the order which denied the credit also attains finality. 13. Having discussed the issue as above, we note that the appellants claim of Cenvat credit in respect of inputs used for the construction of malls, does not have prima facie merits and the appellants are required to put to some terms of deposit on this count. 14. Now we deal with the issue of availability of Cenvat credit on various input services. ....
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....s necessary to restate the figures itself by in crores rounding it off two decimals which is done in the following table: (Figures in Rs.Crores) Appellant's Name; Stay Petition Nos.; Appeal No. Period involved Cenvat Credit Availed Total Availed Utilised (out of Column 7) Not Utilised Input Services Inputs Capital Goods 1 3 4 5 6 7 8 9 M/s. DLF Limited ST/STAY/ 3943/2012 in Appeal No. ST/3089/12 -CU(DB) Jun, 07 To Sept, 10 36.73 2.95 0.22 39.90 13.08 26.82 M/s. DLF Cyber City Developer Ltd. ST/STAY/3944/12 in Appeal No. ST/3090/2012-CU(DB) Jun, 07 to Mar,11 27.71 19.67 3.41 50.79 50.16 0.63 M/s. Galaxy Mercantiles Ltd. ST/STAY/3942/12 in ST/3088/2012-CU(DB) 2007 to 2011 2.28 1.80 4.08 3.20 0.88 Totals 66.72 24.42 3.63 94.77 66.44 28.33 19. Now I would like to note the fact the Ld. Judicial Member agrees in the second un-numbered sub-paragraph of para 7 of the above order as below: "Undisputedly, the Service Tax paid under the category of 'Works Contract....
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....ed by the owner of the property (Appellant) or the contractor constructing the service. But in the normal course the owner of the property engages the architect and finalizes the design of the building then only the work is given to the contractor. Doubt if any in the case of services of consulting engineer is also prima facie misplaced because it is for the owner to take the service of the designer engineer to ensure the safety of the design conceived by the architect. The job of the contractor is to execute the work under supervision of the architect and consulting engineer. These credit cannot be denied without giving any cogent reason. The only reason given by the adjudicating authority is that immovable property has come into existence by use of the service. In a matter involving such an issue by Bombay High Court granted stay against Revenue in the case of Bharti Tele-Ventures Ltd. v. Commissioner - 2011 (21) S.T.R. J79 (Bom.). This order was with reference to inputs/capital goods and not with reference to input services. In respect of input services I do not see any merit in such argument in view of the decision of the Tribunal in Navaratna S.G. Highway Prop. Pvt. Ltd. vs. C....
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....adesh. 26. Further the decision of the Andhra Pradesh High Court in the case of CCE, Visakhaptanam Vs. Sai Sahmita Storages (P) Ltd. [2011 (23) STR 341 (AP)] had allowed credit of inputs used in construction of warehouse used for providing warehousing services. The difference made out by Member Judicial between the facts of that case and the facts of this case this case that there is an intermediary of a contractor in between the assesse who takes credit and the person who uses the material in construction, though for the assesse, is also very thin and is arguable, considering the fact that Cenvat chain is not intended to be broken for such reason. I also note that in a situation where a job-worker manufactures goods Cenvat credit is not denied when there is an intermediary in between 27. Considering such facts there is no justification for calling for any pre-deposit exceeding 35% of the credit involved on inputs and capital goods in each of the appeals for admission of each of the appeals. Such amounts will be substantially lower than what the Judicial Member has proposed and that is the reason for recording this separate order. Mathew John, Member (T) 28. POINT OF DI....