2013 (4) TMI 572 - AT - Service Tax

CENVAT credit of the service tax paid on construction service or works contract service - denied of claim consequent to CBEC Circular No.96/7/2007-ST dated 23/08/2007 as amended by Circular No 98/1/2007-S.T., dated 04/01/2008 clarifying - stay seeked by assessee - Held that - As decided in Sai Sahmita Storage (P) Ltd. (2011 (2) TMI 400 - ANDHRA PRADESH HIGH COURT) and Navratna S.G. Highway Property Pvt. Ltd. (2012 (7) TMI 316 - CESTAT, AHMEDABAD) that excise duty paid on inputs and service tax paid on input services used in the construction of immovable property can be taken and utilized while discharging service tax liability on the renting of such immovable property. In the light of these decisions, the appellant has made out a strong prima facie case in their favour for grant of unconditional waiver of pre-deposit of the dues adjudged against them. Accordingly, unconditional waiver from the pre-deposit of the dues adjudged against the appellant granted and stay recovery therefore thereof during the pendency of these appeals.

Summary

Issues:
Appeals against Order-in-Original No. 22 to 24/ST-II/RS/2012 dated 28/09/2012 passed by Commissioner of Service Tax-II, Mumbai regarding disallowance of CENVAT credit for construction services used in renting immovable property.

Analysis:
The appellant, M/s. Oberoi Mall Limited, engaged in renting immovable property services, availed CENVAT credit for construction services used for the mall. A Circular clarified that CENVAT credit for construction services cannot be taken. A show cause notice proposed to deny CENVAT credit of Rs. 6,00,63,212/- taken by the appellant during April 2008 to March 2009. The impugned order disallowed the CENVAT credit availed by the appellant under Rule 14 of the CENVAT Credit Rules, 2004, and imposed penalties under Section 78 of the Finance Act, 1994. The appellant challenged this decision.

The appellant cited the case of Sai Sahmita Storages (P) Ltd. and Navaratna S.G. Highway Property Pvt. Ltd., where similar issues were considered favorably for availing CENVAT credit on construction services for renting immovable property. The Hon'ble High Court of Andhra Pradesh and the Ahmedabad bench of the Tribunal held that excise duty paid on inputs and service tax on input services for construction can be utilized for service tax on renting immovable property. Based on these precedents, the appellant requested a stay on recovery.

After considering the submissions, the Tribunal noted the favorable decisions in similar cases and found a strong prima facie case in favor of the appellant. Consequently, the Tribunal granted an unconditional waiver from the pre-deposit of the dues adjudged against the appellant and stayed the recovery during the appeal proceedings.

This judgment highlights the interpretation of CENVAT credit rules concerning construction services for renting immovable property. It emphasizes the relevance of precedents in similar cases and the importance of a strong prima facie case for granting waivers and stays during appeal processes.