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2018 (1) TMI 827 - AT - Service TaxCENVAT credit - input service - construction service - Held that - Prior to 16.6.2005 ₹ 5,16,774/-, Appellant is not contesting this portion of the demand. The same is upheld - Between 16.6.2005 and 01.06.2007, the impugned input services availed by appellant are included in Rule 6 (5) of CCR, 2004, and as the appellants were also using these services partly for rendering MMR services, availment of impugned input service credits availed during this period in entirety, amounting to ₹ 11,63,81,259/-, is very much in order. This being so, that part of the order denying this quantum of input credit is set aside - Post 1.6.2007, denial of input service credit of ₹ 12,04,53,005/- for the period post-1.6.2007 also cannot be sustained and hence the relevant portion of the impugned order denying the same is also set aside. Levy of service tax - reimbursable expenses - Electricity and Water charges - Held that - The said issue is covered by the decision in the case of CST Chennai Vs Sangamitra Services Agency 2013 (7) TMI 862 - MADRAS HIGH COURT , where it was held that if a receipt is for reimbursing the expenditure incurred for the purpose, the mere act of reimbursement, per se, would not justify the contention of the Revenue that the same, having the character of the remuneration or commission, deserves to be included in the sum amount of remuneration / Commission - levy of service tax on the reimbursable expenses of electricity charges and water charges is unsustainable and requires to be set aside. Demand of service Tax on Fitout charges - Held that - these are movable items (chairs, tables and other items) which are handed over to the tenants for use by them. The appellant has paid VAT on the consideration received in the said transaction for transfer of right to use the goods - VAT and Service Tax being exclusive, further demand of service tax on the very same consideration received for transfer or right to use of goods cannot sustain - demand set aside. Appeal allowed in part.
Issues Involved:
1. Change of cause title due to introduction of GST. 2. Denial of Cenvat credit on construction services for different periods. 3. Levy of service tax on electricity and water charges. 4. Levy of service tax on fitout charges. Issue-wise Detailed Analysis: 1. Change of Cause Title: The Revenue filed a miscellaneous application (MA) to change the cause title from "Commissioner of Service Tax, Chennai" to "The Commissioner of GST & Central Excise, Chennai South Commissionerate" due to the introduction of GST and the resultant jurisdictional change. The Tribunal allowed this application. 2. Denial of Cenvat Credit on Construction Services: - Prior to 16.06.2005: The credit amount of ?5,16,774/- was confirmed as ineligible since the appellant was not providing any taxable service during this period. The appellant did not contest this portion, and the order was upheld. - Between 16.06.2005 and 01.06.2007: The demand of ?11,63,81,259/- was contested on the grounds that the appellant was providing Management, Maintenance, and Repair (MMR) services, which are taxable. The Tribunal found merit in the appellant's argument that they were eligible for credit on input services as per Rule 6(5) of the Cenvat Credit Rules, 2004, since these services were used for taxable output services. The denial of credit by the department was set aside. - Post 01.06.2007: The disputed credit amount of ?12,04,53,005/- was denied based on a Board Circular which stated that credit on construction services is not eligible. The Tribunal found this clarification flawed and held that the input services used for providing taxable output services (Renting of Immovable Property and MMR services) were eligible for credit. The denial of credit was set aside. 3. Levy of Service Tax on Electricity and Water Charges: The appellant argued that electricity and water charges collected were reimbursable expenses and should not be subject to service tax. The Tribunal agreed, citing previous decisions (Plaza Maintenance and Services Ltd. and CST Chennai vs Sangamitra Services Agency) and set aside the levy of service tax on these charges. 4. Levy of Service Tax on Fitout Charges: The impugned order demanded service tax on fitout charges amounting to ?34,20,527/-. The appellant contended that these were charges for movable items (chairs, tables, etc.) and VAT had already been paid on the transaction. The Tribunal held that since VAT and service tax are mutually exclusive, the demand for service tax on the same transaction was unjust and set it aside. Conclusion: The Tribunal set aside the demand of service tax for the period from 16.06.2005 to March 2009 on all disputed areas, except for the period prior to 16.06.2005, where the demand, interest, and penalty were upheld. The appeal was partly allowed with consequential relief as per law.
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