2016 (11) TMI 194 - AT - Service Tax

Levy of tax - amount received by the appellant from IOCL as commission for operating a petrol pump - Business Auxiliary Service or not? - Held that - on merits there is no case for appellant nor there is any case on limitation. Since there is no serious contest for this demand, we uphold that portion of the order which confirms the demand raised along with interest and also penalty. Denial of CENVAT Credit - demand of service tax under the category of renting of immovable property - construction services - Held that - there is no dispute as to the fact that the appellant had received the services from the service provider for the construction of pre-fabricated building; which was used by appellant for renting out the premises to various outlets and appellant had discharged the service tax liability on such amounts under the category of Renting of Immovable Property Services - reliance placed on the decision of Navratna S.G. Highway Prop P. Ltd. 2012 (7) TMI 316 - CESTAT, AHMEDABAD where it was held that malls which were constructed at various locations for renting out shops and service tax liability discharged for renting of immovable property services assessee cannot be denied the CENVAT credit on input services which are used for construction and maintenance of various malls - demand for reversal of credit set aside. Appeal disposed off - decided partly in favor of appellant.

Summary

Issues:
1. Demand of service tax on commission received from IOCL.
2. Availment of CENVAT credit on construction services.

Analysis:
1. Demand of service tax on commission received from IOCL:
The appellant contested the show-cause notice regarding the demand of service tax on the commission received from IOCL. The appellant argued that the demand was incorrect as it did not consider the threshold benefit of exemption available to them. The adjudicating authority confirmed the demand, and the first appellate authority rejected the appeal. The appellant's counsel submitted that the service tax on the commission had been discharged. The Tribunal found no merit in contesting this demand and upheld the order confirming the demand, interest, and penalty.

2. Availment of CENVAT credit on construction services:
Regarding the eligibility to avail CENVAT credit on construction services, the appellant had utilized the services for constructing a pre-fabricated building rented out to various outlets. The Revenue contended that the CENVAT credit chain was broken as the construction services were directly used for creating immovable property. The Tribunal considered precedents such as Navratna S.G. Highway Prop P. Ltd., Oberoi Mall Ltd., and Maharashtra Cricket Association, where similar issues were decided in favor of the appellant. Additionally, the Tribunal referred to the case of Sai Samhita Storages P. Ltd., where CENVAT credit was allowed for construction of a cold storage facility. Relying on these precedents, the Tribunal held that the impugned order rejecting the CENVAT credit was not in accordance with the law. Thus, the demand for the reversal of CENVAT credit was set aside, and the appeal was allowed on this issue.

In conclusion, the Tribunal upheld the demand of service tax on the commission received from IOCL but allowed the appeal regarding the availment of CENVAT credit on construction services. The judgment provides a detailed analysis of the legal principles and precedents governing the issues involved, ensuring a comprehensive understanding of the decision.