2014 (8) TMI 473 - AT - Service Tax

Denial of CENVAT Credit - telecommunication service, security service and maintenance & repair service - Denial on basis of Circular No. 98/1/2008-S.T., dated 4-1-2008 - Held that - circular denies the Cenvat credit in respect of commercial or industrial construction service or works contract service which are rendered during construction of the immovable property and therefore prima facie the circular is not applicable to the present case. In this case appellants have provided security to the building, telecommunication facility and have also looked after the repairs & maintenance which according to the terms of agreement either the landlord has to undertake or the tenant has to undertake. If as per the terms of the agreement, the landlord undertakes to provide these services, prima facie, they have to be held as input services with regard to renting of immovable property - appellant has a prima facie case in their favour - Stay granted.

Summary

Issues:
- Denial of Cenvat credit for service tax paid on telecommunication service, security service, and maintenance & repair service in relation to rented immovable property.

Analysis:
The judgment revolves around the appellant's request for waiver of the demand made against them for denying Cenvat credit on specific services related to immovable property they have rented. The denial of Cenvat credit was based on Circular No. 98/1/2008-S.T., which clarified that credit for services like commercial or industrial construction service or works contract service would not be available for output services concerning immovable property. However, the circular's applicability to the current case was questioned, as it primarily pertains to services rendered during the construction of immovable property, which is not the case here. The appellant provided security, telecommunication services, and maintenance & repair services as per the agreement terms, which are crucial for renting immovable property. These services, when undertaken by the landlord or tenant as per the agreement, qualify as input services for renting immovable property. The judgment acknowledges that maintenance & repairs fall within the definition of input services, emphasizing that the key aspect is whether the activities were undertaken in relation to the business activity. Consequently, the appellant was deemed to have a prima facie case in their favor, leading to the waiver of the pre-deposit requirement and the grant of stay against recovery of dues during the appeal's pendency.