2011 (12) TMI 371 - AT - Service Tax

Cenvat credit - Renting of immovable property service - service tax paid on input services like construction service works contract service and also inputs like cement steel etc. utilized for construction of warehouses - learned counsel submits that the Commissioner (Appeals) has relied upon the Board s circular F. No.98/1/2008-3T dated 04.01.08 to deny the credit - In this case the property itself is going to be rented out and therefore the appellant has a better case than the office of the provider of the service since without the building itself there cannot be any service - Decided in favor of the assessee by way of direction to decided the appeal on merit

Summary

Issues:
- Cenvat credit of service tax on input services for construction of warehouses
- Denial of credit based on failure to deposit 50% of service tax and penalty
- Interpretation of definition of input service for rented out properties

Analysis:
The appellants in this case had taken Cenvat credit of service tax paid on input services and inputs utilized for the construction of warehouses that were later rented out. The appeal was filed against the confirmation of demand with interest and penalty, which was rejected due to the appellants' failure to deposit 50% of the service tax and penalty.

The learned counsel argued that the denial of credit by the Commissioner (Appeals) was based on a Board's circular, but the counsel contended that the issue fell within the definition of input service. It was highlighted that the service and input used in the construction of warehouses, which were to be rented out, should be considered as input services. The argument emphasized that without the building itself, there could be no service, making the appellant's case stronger than that of an office provider. Consequently, it was deemed that the appellant had a prima facie case in their favor.

Given the circumstances, it was deemed in the interest of justice to waive the requirement of pre-deposit at that stage. The matter was remanded to the Commissioner (Appeals) with a directive to decide the appeal on its merits without insisting on any pre-deposit, providing the appellants with a reasonable opportunity to present their case effectively. This decision was made to ensure a fair hearing and assessment of the appeal without the hindrance of pre-deposit requirements.