TaxTMI 
TaxTMI 
2025 (11) TMI 678
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....the activity of construction services of residential complex at New York City Project [NYCP], for the last five years, an enquiry was initiated calling for the details of completion certificate issued by the Competent Authority. The appellant submitted the completion certificate dated 14.09.2016 issued by Nagar Palika Nigam Indore along with Tower wise details of NYCP and that certain units or tower are still under construction or no work has been started at the time of issue of completion. The appellant also reversed the CENVAT Credit for unsold units not booked as on 14.09.2016. 3. The Department was of the opinion that after issuance of completion certificate on 14.09.2016, the appellant was covered under the provisions of Rule 6 of the CENVAT Credit Rules, 2004 [CCR,2004], as amended vide Notification No.23/2016-CE(NT) dated 1.04.2016 and, therefore, the appellant was liable to reverse the credit of input services pertaining to unsold unit or liable to pay an amount equal to 7% of value of the exempted services. Show cause notice dated 20.10.2021 was issued for the period April 2012 to September 2016 to the appellant for wrong availment of credit of input services as inputs ....
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....and, therefore, the same has to be applied prospectively. He further submitted that the sale of completed units does not fall under the definition of 'service' and hence does not qualify as an exempt service under CCR until the Explanation-3 was inserted from 1.04.2016, which enlarged the scope of 'exempted service' to include an activity which is not a service. The submission of the learned Counsel is that reversal of credit under Rule 6 is applicable only to those credit, which are availed in relevant current year while applying the reversal criteria and the rule does not contemplate reversal of credit which has already been availed for the past period when the output services become non-taxable. The learned Counsel strongly relied on the decision of the Tribunal, which has been affirmed by the High Court in the case of M/s. Alembic Limited & Shreno Ltd. Vs. CCE & St, Vadodara-I [2018 (10) TMI 1557 CESTAT-Ahmd.] and submitted that the Adjudicating Authority violated the judicial discipline in not considering the precedent laid down by the superior Court. 7. The learned Authorised Representative for the Revenue reiterated the findings of the authorities below. He submitte....
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....m, and the issue was whether the appellant is liable to reverse portion of the CENVAT credit availed by them after the receipt of completion certificate for the project and thereafter, they will not be discharging the service tax liability as no advance was received prior to receipt of completion certificate. The Bench was of the view that insertion of Explanation-3 has created a deeming fiction for the purposes of Rule 6, which exempted services as defined in Clause (e) of Rule 2 by including an activity, which is not a 'service' as defined in Section 65B(44) of the Act provided that such activity has used inputs or input services prior to 1.04.2016. Earlier, there was no such stipulation for treating it as an exempt service so as to attract the mischief created under Rule 6. In other words, Rule 6 per se does not apply until 1.04.2016 and, therefore, appellant cannot be expected to pay an amount equal to 8% or 10% of sale price of immovable property, after obtaining such completion certificate, where no service tax is paid as if it is sale of immovable property. On the issue of reversal of proportionate credit out of the valid input service credits availed by them, during the per....
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....n, the appellants are not required to reverse any credit availed on valid input services availed prior to obtaining the completion certificate, the Bench concluded that the said amount is reversed by them under protest cannot be retained by the Revenue authorities and have to be returned to the appellants in accordance with law. The appellants were held to be eligible to seek refund of the said amount. The Gujarat High Court [2019 (7) TMI 908] in principle agreed with the said decision of the Tribunal both regarding non-reversal of the credit availed by the assessee on valid input services for the period till obtaining the completion certificate and also that the amount so reversed have to be refunded to the appellants and accordingly the appeal filed by the Revenue was dismissed. 11. We would like to refer the decision of the Madras High Court in Tractor and Farm Equipment Ltd. V/s C.C.E & CESTAT [2014 (12) TMI 905, Madars High Court] holding that since credit was taken legally as final products during relevant time were eligible to duty, credit was not liable to be reversed as there is no statutory provision to do so. The appeal filed by the Department was dismissed by the Ape....
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....ailable." 14. The High Court, in the case of Filco Trade Centre Pvt. Ltd. v. Union of India, reported in 2018 (17) G.S.T.L. 3 (Guj.), while striking down clause (iv) of sub-section (3) of Section 140 of the CGST Act, recognized that the benefit of credit of eligible duties on the purchases made by the first stage dealer as per the then existing Cenvat credit rules was a vested right and it cannot be taken away by virtue of clause (iv) of sub-section (3) of Section 140 with retrospective effect in relation to the goods which were purchased prior to one year from the appointed day. 15. In view of the law laid down in the aforementioned decisions we may now consider the facts of the instant case. The appellant is engaged in development of colony and construction under its project NYCP involving:- Shopping Mall, Hotel Community building for residents Duplex bungalows category, A and B Residential Towers A1, B1, B2, B3, C1, C2, C3, Residential plots EWS Units. 16. On the date of completion certificate on 14.09.2016, 558 units were completed and the remaining units/towers were still under construction or had not commenced work. The breakup of the project ....
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.... said completion date. There is no reason to doubt the certificate issued by the Chartered Accountant, which has been held to have substantive value. Thus the appellant has availed only eligible credit after issuance of completion certificate. As the Notification No.13/2016, w.e.f. 01.04.2016 had inserted Explanation- 3 that 'exempted service' under Rule 2(e) to include an activity which is not a 'service' as defined under Section 65B (44) of the Act has been held to be prospective and, therefore, no reversal was required to be made for the period till March 31, 2016. Following the decisions referred above, we are of the view that no reversal of eligible past credits is permissible under Rule 6 by reason of output services becoming non-taxable. 17. Appeal No.ST/51189 of 2020 arises out of the rejection of the refund claim by the authorities below, both on merit as well as on being time barred having been filed after one year from the date of payment in terms of Section 11B of the Act. We find that the appellant had reversed the input service credit on 01.07.2017 pertaining to the unsold units after getting the completion certificate in view of the observations made by the audit.....
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....sequently entitled to the refund of the said amount which has been wrongly reversed by the wrong interpretation placed by the Department. To quote the findings of the Gujarat High Court in M/s. Alembic as under:- "18. The Tribunal therefore, rightly held that once the respondent are not required to reverse any credit availed by them on valid input services availed during the period 2010 till obtaining of completion certificate, the said amounts reversed by them under protest cannot be retained by the revenue authorities and have to be refunded to the respondent." 19. The conclusion arrived at above by the Gujarat High Court with reference to similar context is binding on us and following the same, we hold that the appellant is entitled to the refund of the said amount. As the refund application has been considered in view of the findings on reversal of CENVAT Credit, the reliance placed by the Revenue on the decisions of the Apex Court in the case of ITC Ltd. [2019 (368) ELT 216 (SC)] Priya Blue Industries [2004 (172) ELT 145 (SC)] and Flock India Private Limited [2000 (120) ELT 285 (SC)] are not applicable. In that view, the refund application needs to be allowed. 2....