TaxTMI 
TaxTMI 
TaxTMI 
2019 (9) TMI 581
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....espect of certain amounts recovered from the Members of Integrated Textile Park floated by the appellant. Ld. Counsel pointed out that Gujarat Eco Textile Park is a park floated under the scheme of integrated textile parks (SIPP) formed by the Govt. of India (Ministry of Textiles). Ld. Counsel pointed out that in terms of aforesaid scheme, the appellant is a special purpose vehicle (SPV) on public private partnership. The appellant SPV was formed for acquiring land and setting up infrastructure for establishing textile parks wherein different member textile unit could operate. He pointed out that Ministry of Textiles had engaged IL&FS as Project Management Consultant (PMC) for implementation of the scheme. The said PMC reports to Ministry of Textiles. Ministry of Textiles supervises the operation of the parks through the said PMC. The SPV also consists of representatives of local industries, financial institutions, State and Central Govt. representatives. 2.1 The appellant company was incorporated on 07.10.2005 under the said model with representative of Ministry and representatives of the Banks on Board of the Company. On 08.10.2005 IL&FS was appointed as the Project Management C....
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....he SPV. He also pointed out that the non-refundable contribution given by the members is invested and used for construction/ development of infrastructure and common facilities in the industrial park as per the scheme. He also pointed out that the amount collected as rent and user charges/ variable expenses from the members are treated as consideration for rendering service in the nature of renting of immovable property and other miscellaneous services and appropriate service tax is being paid by the appellant. 2.5 Ld. Counsel pointed out that the Revenue is seeking to demand service tax on the 'non-refundable contribution' made by the member units towards the capital expenditure of the park for developing and constructing the infrastructure under the category of renting of immovable property service. The allegation in the notice is that rental amount is collected in guise of non-refundable contribution. Ld. Counsel pointed out that no evidence whatsoever has been produced by the Revenue in support of this claim. The revenue allegation is totally unsubstantiated. Ld. Counsel also pointed out that extended period of limitation has been invoked to demand the said service tax. 2.6 L....
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....t works out to 1.5 to 2% of the jantri value which in normal market scenario is a fair rent. He pointed out that the notice alleged that a modus operandi was designed by the appellant to disguise the rent for the vacant land as non-refundable contribution. He argued that the said allegation is totally baseless for the reason that the entire SPV has been set up on a PPP Model under the control and supervision of Ministry of Textile with the representative of Ministry as a member of the Board of SPV. He pointed out that the manner in which the various members are to contribute for the infrastructure has been clearly spelled out in the scheme. He further pointed out that under the terms of the scheme the entire amount of non-refundable contribution is mandated to be used solely for infrastructure purposes. He pointed out that the collection and, release of amount from accounts is maintained by PMC and it is ultimate utilization are all documented as per scheme. He pointed out that the entire set up has been arranged, supervised and operationalized by ILF&S (PMC approved by Ministry) and the model of the Share subscription agreement as also the lease deed even approved by the PMC under....
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....intention to disguise one payment or other. Moreover the project came into existence prior to introduction of levy of renting of immovable property service and therefore, there cannot be any intention to evade when the said scheme was devised. 2.12 The next issue relates to the availment of cenvat credit on service tax paid for construction of compound wall. 2.13 Ld. Counsel argued that the appellants are paying service tax on various services provided to the Member Units. The service are in relation to the infrastructure support provided to Member Units. He argued that in these circumstances the construction of wall and laying of pipeline was a necessary ingredient to enable the appellant to provide the said services to the member units and therefore, the credit availed in respect of construction of wall and laying of pipelines cannot be denied. He relied on the decision of Tribunal in the case of Navratna SG Highway Prop. Pvt. Ltd. 2012 (28) STR 166 (Tri. Amd.). He argued that the Circular dated 04.01.2008 relied in the impugned order is contrary to statutory provision and could not be relied upon. 2.14 He further argued that service tax has been demanded on the amount recover....
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....r intention to evade. He further argued that entire data was submitted from time to time in the ST-3 returns. He also pointed out there were various correspondences between Revenue and the appellant to which the appellant had responded very promptly during the period January 2010 to November 2010. During this period balance-sheet and various documents were submitted to Revenue. He argued that in these circumstances introduction of extended period of limitation is totally misplaced. 3. Ld. AR relies on the impugned order. 4. We have gone through rival submissions. We find that demand has been made under following heads: * Rs. 4,26,54,866/- (service tax- Issue of rental of immovable property) * Rs. 9,05,725/- (Cenvat Credit of Service tax paid on construction of compound wall) * Rs. 68,076/- (Cenvat Credit of service tax paid on construction of new pipeline) * Rs. 99,728/- [Service Tax on Tender and Plan Evaluation Fees (under BAS) and Finger Analysis Fees (technical testing and analysis)] 4.1 Demand of Rs. 4,26,54,866/- has been made under the head of renting of immovable property service. It has been explained by Ld. Counsel for the appellant that the appellant had set u....
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.... religious body (ii) renting of immovable property to a religious body, (iii) renting of immovable property to an educational body, other than commercial training or coaching centre Commercial coaching or training centre is defined under section 65(27). 6.3.1 Where renting of immovable property is a single composite contract involving part of property for use in commerce or business and part of it for residential/accommodation purposes, for the purpose of levy of service tax under this sub-clause, entire property under the contract is treated as property for use in commerce or business and accordingly the total value of the contract shall be the taxable value." Thereafter introduction of Finance Act, 2010 w.e.f. 08.05.2010 levy of service tax on renting of vacant land was introduced. The issue was clarified vide Dof No. 334/1/2010-TRU dated 26.02.2010 in following words: "Amendments are being made in the definition of the taxable service 'Renting of immovable property' [section 65 (105) (zzzz)] to,- (i) provide explicitly that the activity of 'renting' itself is a taxable service. This change is being given retrospective effect from 1-6-2007; and (ii) provide that re....
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....ertains to is totally misplaced. The entire scheme was devised in consultation with Government of India, Ministry of Textile and in supervision of the PMC appointed by the Government. The entire scheme was devised much before the levy of service tax on renting of immoveable property was introduced and in these circumstances to allege that rent was being collected under garb of non refundable contribution is totally misplaced. It is seen that when the scheme was devised, there was no levy of service tax on renting of immovable property and thus they could not have any intention to evade or to manipulate records to receive rent as non refundable contribution. Thus, the demand on such count is also not sustainable on the ground of limitation as well. 4.6 In view of above we do not find any merit in demand of service tax under the head of immovable property service and the demand on that count is set aside. 5. The next issue relates to demand of reversal of cenvat credit on service tax paid for construction of compound wall and laying of new pipelines. It is seen that the appellant are paying service tax on the rent received as well as on usage charges recovered from their members. T....
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....is that they claimed CENVAT credit irregularly with reference to cement and TMT bars used in the construction of warehouses through which the storage and warehousing services are provided by the assessee. Section 65(102) of the Finance Act defines "storage and warehousing" as to include storage and warehousing services for goods including liquids and gases but does not include any service provided for storage of agricultural produce or in service provided by cold storage. As per Section 65(105)(zza), read with Section 66 of the Finance Act, there shall be levied tax on storage and warehousing services at 12% of the value of taxable service. The service tax payable is determined in accordance with Section 67(4) read with the Service Tax Rules, 1994 made in exercise of the powers under Section 94 of the Finance Act. There is no dispute that every provider of taxable service is entitled to claim CENVAT credit in relation to input service. Rule 2(k) and (l) of the Rules are relevant and they read as under. 2. Definitions. - (k) "input" means - all goods, except light diesel oil, high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufa....
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.... word "input" can be divided into three parts namely : (i) specific part (ii) inclusive part (iii) place of use 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 product or not. The crucial requirement, therefore, is that all goods "used in or in relation to the manufacture" of final products qualify as "input". This presupposes that the clement of "manufacture" must be present." 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 pari materia as far as the service providers are con....