2018 (1) TMI 827

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.... engaged in the activity of development and maintenance of Information Technology Park. On investigation conducted by the SIR Wing of the Service Tax Commissionerate, it was noticed that appellant had short paid service tax. Show cause notices were issued proposing to recover the service tax along with interest and also for imposing penalties. After due process of law, the Commissioner disallowed credit on input services and confirmed the demand along with interest and imposed penalties. Aggrieved appellants are before this forum. 4. On behalf of the appellant, Ld. Senior Counsel Shri N. Venkatraman submitted the following oral and written submissions which can be summarized as under : i) In terms of an agreement entered into with M/s.Tamil Nadu Industrial Development Corporation Ltd., the appellant had to develop and maintain Hi-Tech office space for IT and ITES companies. The appellant entered into an agreement with their holding company namely M/s.Ascendas (India) Private Ltd. for construction of building which included comprehensive services in relation to development and construction such as project management, conceptual and detailed design for architecture, marke....

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.... That appellant having utilized common input services for providing both taxable and exempted services will be hit by Rule 6(1), (2) and (3) of Cenvat Credit Rules, 2004. That therefore the credit cannot be allowed; He explained that appellant has availed credit on various input services which are specified in Rule 6 (5) of the Cenvat Credit Rules, 2004; that Rule 6(5) provides that notwithstanding anything contained in sub-rules (1), (2) and (3) of CCR2004, credit of service tax paid on input services specified in the said rule is eligible unless such service is exclusively used for providing exempted services. The appellant has availed credit only in respect of services specified in these rules. Since during the period 16.06.2005 to 1.6.2007 appellant was using the services for taxable services on MMR as well as RIP services, it cannot be said that services were exclusively used for exempted services; that therefore as per Rule 6(5) appellant is eligible for credit. v) For the period Post-1.6.2007, the department has denied credit placing reliance on the Board Circular No.98/1/2008-STdt. 4.1.2008; that Board circular has clarified that credit on construction services is ....

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....2005 to 1.6.2007, the appellant was providing only MMR services. The adjudicating authority has allowed credit in respect of input services that have nexus in relation to providing output services of maintenance and repair services. However, the credit availed on input services used in relation to providing RIP services was disallowed. The services that are used in relation to MMR services are distinct and different from the services used in relation to RIP services and therefore provisions of Rules 6 (5) would not be applicable. Further the construction services are used for bringing into existence an immovable property and not for any output service and therefore credit cannot be availed for providing output service of renting of immovable property. Board has clarified in the said circular and is therefore binding. The Tribunal decision in the case of Venus Investments Vs CCE Vadodara - 2012 (28) STR 174 (Tri.-Ahmd.) supports this stand of the department; that construction services bring into existence any immovable property / building. The immovable property thus brought into existence by the use of construction services is used for providing the rental services. In the circumst....

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....rvice and hence credit availed is not eligible. Appellant is not contesting this portion of the demand. The same is upheld. Impugned order to this extent is not disturbed and sustained. (ii) Between 16.6.2005 and 01.06.2007 - Demand pertaining to this period is Rs. 11,63,81,259/-. It is alleged that appellants were engaged in providing taxable service under Management, Maintenance and Repair Service in terms of Section 65 (64) of the Finance Act, 1994 which was brought to service tax net w.e.f. 16.6.2005. The contention of the appellant is that they had engaged contractors to provide various taxable services for construction of building and the input services credit was availed by them on these services. Appellants contend that they had started to provide MMR services for the very same building for which construction services had been availed, which is a taxable output service. The adjudicating authority has denied the credit on the construction services on the ground that renting of immovable property service was brought into tax net only w.e.f. 16.6.2005. Adjudicating authority has denied the credit on the ground of renting of immovable property was brought into service ....

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....aws, the relevant portions of which decisions are also reproduced for ease of reference :- (i) CCE Visakhapatnam Vs Sai Sahmita Storages (P) Ltd. - 2011 (23) STR 341 (AP) "7. A plain reading of both the above definitions would show that, unless excluded, ail goods used in relation to manufacture of final product or for any other purpose used by a provider of taxable service for providing an output service are eligible for CENVAT credit. In Maruti Suzuki Ltd. v. Commissioner of Central Excise, Delhi-III, (2009) 9 SCC 193 = 2009 (240) E.L.T. 641 (S.C.) the Supreme Court laid down as follows. 9. Coming to the statutory definition of the word input in Rule 2(g) in the CENVAT Credit Rules, 2002, it may be noted that the said definition of the word input can be divided into three parts, namely: (i) specific part (ii) inclusive part (iii) place of use 10. Coming to the specific part, one finds that the word input is defined to mean all goods, except light diesel oil, high speed diesel oil and petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final pr....

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.... Rule 15(2) of the Rules is concerned, unless and until there is a finding that there was suppression of fact, and irregular claim of CENVAT credit, the question of levying penalty under Rule 15(2) of the Rules docs not arise. In that view of the matter, the order levying penalty was rightly set aside by the CESTAT." (ii) Navaratna S.G. Highway prop. Pvt. Ltd. Vs CST Ahmedabad - 2012 (28) STR 166 (Trj.-All.) "3.2 The definition of inputs is limited to the definition of input services as can be seen from the definition given above. Credit of duty paid on inputs is available when the inputs are used for providing an output service . Therefore, there is a need to say that the inputs have been used for providing an output service . In the case of input service , the definition includes input services used by a provider of taxable service for providing an output service. Therefore the definition of input and input service are parimateria as far as the service providers are concerned. That being the position, the decision of the Hon ble High Court of Andhra Pradesh would be applicable to the present case. In that case also, the Hon ble High Court took the view that with....