2018 (9) TMI 313 - AT - Service Tax

CENVAT Credit - input service - renting of immovable property service - denial of credit on the ground that the premises No. 67 was not registered with the department - whether the appellant are entitled to cenvat credit of the service tax paid on input service namely renting of immovable property relating to Unit No. 67 Atlanta Nariman Point Mumbai? - Held that - It is not in dispute that the appellant have been providing taxable service as well as exempted service (trading activity of rubber product) from Unit No. 67; all the invoices are raised from Unit No. 65 irrespective of whether services are provided from Unit No. 65 or 67 - denial of credit of service tax paid on renting of immovable property service relating to Unit No. 67 cannot be sustained merely for the reason that separate service tax registration was not obtained for the said premise. Further Once the department acknowledged that services rendered from the premises No. 67 are both taxable and exempted service and demanded reversal of proportionate cenvat credit attributable to said exempted service denial of credit on the input service i.e. Renting of Immovable Property sounds contradictory; hence cannot be sustained. Appeal allowed - decided in favor of appellant.

Summary

Issues: Appeal against order-in-appeal regarding admissibility of cenvat credit on input service and reversal of credit under Rule 6(3) of Cenvat Credit Rules 2004.

Analysis:
1. The appellant provided taxable service under Business Auxiliary Service from two premises, one of which was also used for trading of rubber products. The department issued show cause notices for inadmissible credit on renting of immovable property service and reversal of cenvat credit under Rule 6(3) for providing exempted services.

2. The appellant reversed the cenvat credit as directed but appealed against the reversal order. The Chartered Accountant argued that denial of credit on input service due to lack of separate registration for the premise was not valid, citing relevant case laws.

3. The Revenue supported the findings of the Commissioner (Appeals). The Tribunal deliberated on whether the appellant was entitled to cenvat credit on the service tax paid for renting of immovable property related to one of the premises.

4. The Tribunal noted that the appellant provided both taxable and exempted services from the premise in question, with all invoices raised from another unit. Acknowledging the mixed activities, the department had directed the reversal of credit for exempted services.

5. The Tribunal agreed with the appellant's argument that denial of credit for renting of immovable property service based on lack of separate registration was not sustainable. Citing relevant case law, the Tribunal held that since the department acknowledged the mixed services provided from the premise, denial of credit on the input service was contradictory and set aside the impugned order in favor of the appellant.