AI Drafter 
TaxTMI 
TaxTMI 
2018 (12) TMI 1535
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....ship, the appellant engaged some of the foreign companies and got themselves registered under the category of Consulting Engineer Service for discharging service tax under reverse charge mechanism. The department was of the view that the appellants are not eligible to take credit of such service tax paid by them for the input services received from foreign company for the reason that at the time of availing such services, the appellant had not registered for providing any output service. Show cause notice dated 30.9.2010 was issued for the year April 2009 to March 2010 proposing to recover the irregularly availed credit to the tune of Rs. 79,26,871/- along with interest and also for imposing penalties. After due process of law, the original....
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.... including works contract service also. During the disputed period, the appellant in the process of setting up the township project had received various input services like management consultancy, manpower recruitment, renting of immovable property, survey, design, engineering, telecom service etc. These credits were kept in reserve for utilization for future liabilities when they provide the output services. The credit was thus accumulated for utilization after they have paid the service tax on the input services. The department does not have a case that the appellant has not discharged the service tax on the input services. They have raised the demand alleging that the appellant has not taken registration for the output services (WCS/CCS)....
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....vt. Ltd. - 2016 (43) STR 57 (Kar.). 4. The ld. AR Shri A. Cletus supported the findings in the impugned order. He submitted that the input services like management consultancy, manpower recruitment, renting of immovable property, survey, design, engineering, telecom service etc. does not qualify as input services for the reason that during the disputed period, the appellant was not providing any output service at all. Without providing any output service, the appellant cannot contend that these are input services. The service can be qualified to be an input service only if these are used for providing the output service. Further, the services have been received from the foreign company. The appellant does not have a case that the serv....
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..... (supra) as well as Arvind Fashions Ltd. (supra) have categorically held that the assessees are eligible to take credit of the service tax paid under reverse charge mechanism. The relevant portion of the order in Kansara Modler Ltd. is reproduced as under:- 5. For sake of convenience we reproduce these Rules below :- (i) Rule 2(p) - "output service" means any taxable service, excluding the taxable service referred to in sub-clause (zzp) of clause (105) of Section 65 of the Finance Act, provided by the provider of taxable service, to a customer, client, subscriber, policy holder or any other person, as the case may be, and the expressions "provider" and "provided" shall be construed accordingly; (ii) Rule 2(q) - "....
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....orrect and the impugned order to this extent is set aside. 6.2 The next issue for consideration is the disallowance of credit to the tune of Rs. 1,58,89,282/-. On various services, the appellant has availed credit for input services. The department has denied the credit stating that the appellant has not started providing output service and have taken registration for providing output service of works contract service only with effect from 23.10.2009. The department is of the view that they are eligible to take credit only from the date of registration. Needless to say that the definition of input service prior to 1.4.2011 included services like setting up of factory / office. From this it can be inferred that services which are needed t....