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2019 (5) TMI 1532 - AT - Service TaxCENVAT Credit - inputs, capital goods and input services consumed for the construction of the mall - rejection on the ground that the construction activity has not discharged any service tax liability and as such the credit cannot be held to be available to the assessee - HELD THAT - It stands held in the case of COMMR. OF C. EX., VISAKHAPATNAM-II VERSUS SAI SAHMITA STORAGES (P) LTD. 2011 (2) TMI 400 - ANDHRA PRADESH HIGH COURT that services used for constructing mall which were meant for renting which were discharging service tax liability, the duty paid on the inputs or capital goods or services used for construction of the mall is available as credit. As such, the credit stand rightly availed by the appellant and utilized for discharge of their service tax liability under the category of Renting of Immovable Property . Inasmuch as, the appeal has been allowed on merits, we are not going to the alternative plea of demand being barred by limitation. Credit allowed - appeal allowed - decided in favor of appellant.
Issues: Availment of Cenvat credit for construction of mall without discharging service tax liability, applicability of Tribunal decisions, reversal of Tribunal decision by High Court, relevance of Andhra Pradesh High Court judgment, imposition of penalty.
Analysis: 1. Availment of Cenvat Credit: The appellant constructed a mall and rented it out to lessees, availing Cenvat credit for duty paid on inputs, capital goods, and services used for construction. The revenue objected to this credit, arguing that since the construction activity did not discharge any service tax liability, the credit should not be available. A show cause notice was issued proposing a duty demand of approximately ?3.64 crores for the period October 2009 to March 2014. 2. Contention of the Appellant: The appellant contended that the mall was constructed specifically for renting purposes, establishing a nexus with the output service of 'renting of immovable property' on which service tax was being paid. They argued that part of the credit was availed post-construction for services related to renting. The appellant cited Tribunal decisions like Oberoi Mall Ltd. and Laxmi Enterprises, as well as the Andhra Pradesh High Court judgment in the case of Sai Sahmita Storages Pvt. Ltd. to support their position. 3. Adjudication and Tribunal Decisions: The Original Adjudicating Authority referred to divergent Tribunal views and cited the CESTAT-Ahmadabad decision in the case of Mundra Port & Special Economic Zone Ltd. where it was held that an assessee cannot avail Cenvat credit for inputs used in construction. Relying on this decision, the authority confirmed the duty demand, along with interest and penalty. 4. Reversal by High Court: The Tribunal noted that the decision in the case of Mundra Port & Special Economic Zone Ltd. was reversed by the Hon'ble Gujarat High Court, rendering the reference to the original decision unnecessary. Additionally, the Tribunal found that various decisions, including the Andhra Pradesh High Court judgment in the case of Sai Sahmita Storages, supported the appellant's position. 5. Decision and Conclusion: Considering the Tribunal decisions like Oberoi Mall Ltd. and Laxmi Enterprises, the Tribunal held that the credit availed by the appellant for construction of the mall and utilized for service tax liability under 'Renting of Immovable Property' was valid. The impugned order was set aside, and the appeal was allowed with consequential relief. The Tribunal did not address the alternative plea of the demand being barred by limitation since the appeal was allowed on merits.
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