2014 (1) TMI 1245 - AT - Service Tax

Works Contract - Availment of CENVAT Credit - Held that - appellant has reversed an amount of Rs. 75,13,839/- and the only balance amount stands ordered to be recovered. Further we, prima facie, hold that the appellant may be eligible for credit on some of the services and therefore, the amount already reversed by them should be treated as sufficient for the purpose of hearing the appeal - there shall be waiver of pre-deposit of the balance of dues as per the impugned order and stay of recovery thereof till the disposal of the appeal - Stay granted.

Summary

Issues:
1. Eligibility of input service credit for a hotel under the category of "Works Contract".
2. Interpretation of input service in relation to the construction of the hotel and provision of output services.
3. Recovery of dues, interest, and penalties by the Commissioner.

Analysis:
1. The appellant, a hotel, utilized services like "Mandap Keeper", "Rent-a-cab Operator", "Health Club and Fitness Centre", etc., provided by a contractor under the category of "Works Contract". A show-cause notice was issued questioning the correctness of the Service Tax credit claimed by the appellant. The appellant voluntarily reversed a significant credit amount. The Commissioner ordered recovery of the remaining dues, interest on the total amount, and imposed penalties.

2. The appellant argued that services utilized for setting up the hotel premises, essential for providing output services, should qualify as input services eligible for credit. They contended that fees paid for project management and architectural services related to the construction of the hotel, which facilitated the provision of output services, should be considered eligible for credit.

3. The Additional Commissioner contended that the input services for which credit was claimed should be considered relevant only for the construction of the hotel and not for the output services provided by the appellant. The Tribunal, after reviewing the submissions and records, noted that the appellant had already reversed a substantial amount of credit. They found that the appellant might be eligible for credit on certain services related to the construction and provision of output services. As a result, the Tribunal waived the pre-deposit of the remaining dues and stayed the recovery until the appeal's disposal.

In conclusion, the Tribunal granted relief to the appellant by allowing a waiver of pre-deposit and staying the recovery of the balance of dues until the appeal's final resolution. The judgment highlighted the importance of considering the eligibility of input service credit in the context of both construction activities and the provision of output services by a hotel under a Works Contract, emphasizing the need for a thorough analysis of the services utilized in such scenarios.