2014 (3) TMI 34 - AT - Service Tax

Waiver of pre deposit - Cenvat Credit - Renting of Immovable Property - Input services i.e. Industrial or Commercial Construction Service - Held that - prima facie, there was no direct nexus between the inputs/input services and the Renting of Immovable Property - Following decision of assessee s own previous case - Conditional stay granted.

Summary

Issues:
- Waiver and stay of adjudged dues including service tax and education cesses for the period from April 2008 to March 2009.
- Utilization of CENVAT credit on various input services and inputs in the activity of 'Renting of Immovable Property.'
- Nexus between input services/inputs and the output service of Renting of Immovable Property.

Analysis:
The appellant sought waiver and stay of adjudged dues amounting to Rs. 8.24 crores, comprising service tax and education cesses for the period from April 2008 to March 2009. The appellant was involved in the 'Renting of Immovable Property' activity during this period, utilizing CENVAT credit on multiple input services and inputs. These input services included Architect Service, Advertising Agency Service, Authorized Service Station Service, Banking and Other Financial Services, Chartered Accountant's Service, among others. Similarly, various inputs like Iron and Steel, Cement, DG set, Lift, Air conditioning, etc., were also part of this case.

The appellant argued that the inputs and input services were used in, or in relation to, the construction of buildings by contractors, and the constructed buildings were the subject-matter of the appellant's output service, Renting of Immovable Property. However, the bench noted that there was no direct nexus between the inputs/input services and the Renting of Immovable Property. This observation was based on previous cases like M/s. Golflinks Software Park Pvt. Ltd. and RMZ Infotech Pvt. Ltd., where pre-deposits were directed based on similar considerations.

Considering the financial hardships of the appellant, the bench directed the appellant to pre-deposit Rs. 3 crores within 8 weeks and report compliance by a specified date. Upon compliance, there would be a waiver and stay in respect of penalties imposed, as well as the remaining amount of service tax, education cesses, and interest thereon. The direction for pre-deposit was in line with previous cases and aimed at ensuring compliance with tax liabilities.