TaxTMI 
TaxTMI 
TaxTMI 
2015 (7) TMI 930
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.... the order of the Commissioner disallowing the assessees/respondents Cenvat Credit in the sum of Rs. 1,45,32,300/- availed by them holding that it was availed on inadmissible services. The Commissioner ordered recovery of interest and also imposed a penalty of Rs. 1,45,32,300/-. The matter pertains to the period 2007-08 to 2009-10. 2. The appeal is admitted on the following substantial questions of law:- "(i) Whether the Decision of the Tribunal was justified to allow the Cenvat Credit of Service Tax paid on Civil Construction service which is an input services to the immoveable property i.e. Factory whereas the factory is neither a service nor goods? ii) Whether the civil Construction can be defined as an input under Rule 2(i) of the ....
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....edit in respect of the said service tax paid. 5. It was not contended before us that service tax was not payable. The only question is whether the said services fall within the meaning of the term "input service" in Section 2(l)(ii). Rule 2(l)(ii) and rule 3(1)(ix) of the Cenvat Credit Rules, 2004, in so far as they are relevant, read as under:- "Definitions. 2. In these rules, unless the context otherwise requires,- (a) to (k) ...... ......... ........ ..... (l) "input service" means any service,- (i) ... ... .... ..... (ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products, upto the place of removal and includes services used in re....
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....rawn somewhere to avoid undue extension of the phrases 'directly or indirectly' and 'in or in relation to' by adopting a common sense approach. Immovable property is neither service nor goods and, therefore, input credit cannot be taken. Although civil construction work is a taxable service under the Finance Act, 1994, it is basically civil in nature relatable to the immovable property not chargeable to central excise duty. Immovable property is neither 'service' nor 'goods'. Input credit is not available to them. Commercial or industrial construction service or works contract service is an input service for immovable property which is neither subjected to central excise duty nor to service tax. In this regard, the Commissioner referred to ....
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....he factory are used by the manufacturer in any event indirectly in or in relation to the manufacture of the final product, namely, metal-sheets. The respondents' case, therefore, falls within the first part of Rule 2(l) aptly referred to by Mr. Amrinder Singh as the "means part". 9. The respondents' case also falls within the second part of Rule 2(l) i.e. the "inclusive" part. The definition of the words "input service" also specifically includes the services used in relation to setting up of a factory. Mr. Amrinder Singh rightly contended that it was not the appellant's case that the services were not used for the setting up of the factory. The doubt in this regard is set at rest by the second part of Section 2(l)(ii) which includes withi....
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....his sub-clause, the construction of a new building which is intended for sale, wholly or partly, by a builder or any person authorised by the builder before, during or after construction (except in cases for which no sum is received from or on behalf of the prospective buyer by the builder or the person authorised by the builder before grant of completion certificate by the authority competent to issue such certificate under any law for the time being in force shall be deemed to be service provided by the builder to the buyer." 11. If in fact the said services were not covered by Rule 2(l), it would not have been necessary to introduce the amendment. It is clear, therefore, that prior to the amendment the setting up of a factory premises o....
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....r concession, then credit of the input service would be available. This would be so even if the assessee does not satisfy other limb/limbs of the above definition. To illustrate, input services used in relation to setting up, modernization, renovation or repairs of a factory will be allowed as credit, even if they are assumed as not an activity relating to business as long as they are associated directly or indirectly in relation to manufacture of final products and transportation of final products upto the place of removal. This would follow from the observation of the Supreme Court in Kerala State Cooperative Marketing Federation Ltd. and Ors. Vs. Commissioner of Income-tax 1998 (5) SCC 48, which is as under: 7. We may notice that the p....