2014 (6) TMI 314 - AT - Service Tax

Cenvat credit of service tax - renting of immovable services - cenvat credit on input services used in the construction of immovable property - Held that - prima facie assessee is entitled to the Cenvat credit of service tax paid on input services used in the construction of immovable property. Regarding duty demand - adjudicating authority has confirmed the demand based upon the bills raised by them instead of quantifying the same on the amount received by them. If the rent amount received is taken into consideration the total duty liability would come to Rs.24, 94, 797/-. Out of the said demand they have deposited Rs.8, 36, 521/- from their Cenvat credit account and Rs.4, 94, 245/- by cash. The same stands informed to the jurisdictional Supdt. under the cover of letter dated 18.10.2013. As regards the balance amount he submits that their tenant had approached the Hon ble Delhi High Court and subsequently Hon ble Supreme Court and in terms of the interim order passed by the Hon ble Supreme Court 50% of the service tax required to be deposited. The same stands deposited by their tenant. As such he submits that no more dues are required to be deposited in respect of the said demand - stay granted.

Summary

Issues:
1. Availment of Cenvat credit on input services.
2. Taxability of 'renting of immovable services'.

Analysis:

*Availment of Cenvat credit on input services:*
The appellant, engaged in constructing a mall rented out to customers, faced a demand of Rs.69,95,300/- for denied Cenvat credit on service tax paid for input services. The lower authorities relied on a previous Tribunal decision in the case of Venus Investments, which was later modified to allow rectification. Another Tribunal decision in the case of Oberoi Mall Ltd. supported the appellant's entitlement to Cenvat credit for service tax on input services used in property construction. Consequently, the Tribunal found the appellant had a strong prima facie case, waiving the pre-deposit condition for the demand.

*Taxability of 'renting of immovable services':*
Regarding the demand of Rs.38,45,212/- for 'renting of immovable services', the appellant acknowledged their service tax liability but disputed the adjudicating authority's calculation based on billed amounts. The appellant argued that considering the actual rent received, the duty liability would be Rs.24,94,797/-. They had already paid a portion of this demand from their Cenvat credit and cash. Notably, their tenant, under a Supreme Court interim order, had deposited 50% of the service tax. The appellant contended that no further payment was due. Acknowledging these submissions, the Tribunal waived the requirement for the balance amount pending appeal, as the appellant had paid the admitted duty liabilities. The stay petition was thus disposed of accordingly.