2019 (11) TMI 1259 - AT - Service Tax

CENVAT Credit - construction services w.e.f. 01/07/2012 - exempt services or not - denial of credit credit to the extent not used in construction of unsold flats on which completion certificate was already issued - input service for which payment of service tax was not made within the stipulated time period - flats for which completion certificate was issued delayed / short payment of service tax was noticed - Rule 6(1) of CCR - N/N. 13/2016- CE(NT) dt. 01/03/2016 - HELD THAT - The issue involved in the present case is no more res integra and has been settled by various decisions of the Tribunal cited supra wherein it has been consistently held that during the relevant period, Rule 6 was not applicable. In this case, the period involved is prior to the amendment in the Rule 6(1) of CCR, 2004 - This Tribunal in the case of M/S. TPL DEVELOPERS VERSUS COMMISSIONER OF CENTRAL TAX, BANGALORE NORTH 2019 (3) TMI 37 - CESTAT BANGALORE has held that the assessee was not legally required to reverse any credit which was availed by them during the period 2010 till obtaining completion certificate i.e. during the period when output service was wholly taxable in their hand, merely because later on, some portion of the property was converted into immovable property on account of receipt of completion certificate and on which no service tax would be paid in future. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against order confirming demand under Section 73(3) of the Finance Act, interest under Section 75, and penalties under Sections 77(2) and 78.
- Availing wrong input service CENVAT credit not used in construction of unsold flats.
- Demand of service tax towards service value received before completion certificate of residential flats.
- Denial of CENVAT credit and confirmation of service tax demand by Asst. Commissioner.
- Applicability of Rule 6 of CENVAT Credit Rules, 2004.
- Legal requirement to reverse credit availed before obtaining completion certificate.

Analysis:
The appellant undertook construction work and availed CENVAT credit on services during the construction period. The Asst. Commissioner denied the credit and confirmed service tax demand for flats completed before obtaining completion certificates. The appellant argued that there was no requirement to reverse credit before the introduction of an explanation in Rule 6 of CENVAT Credit Rules, 2004. Citing various tribunal decisions, the appellant contended that unsold flats on completion date do not require credit reversal. The appellant also relied on Supreme Court rulings emphasizing the indefeasible nature of rightly availed CENVAT credit, which cannot be reversed due to subsequent events.

The Tribunal noted that the issue was settled by previous decisions, holding that Rule 6 was not applicable during the relevant period. The Tribunal referred to a specific case where no credit reversal was required until obtaining completion certificates for the entire project. As the appellant's case fell within the same legal framework, the Tribunal found the impugned order unsustainable and set it aside, allowing the appeal with consequential relief, if any. The Tribunal's decision was based on the established legal principles and interpretations regarding the availing and reversal of CENVAT credit in the construction sector.

In conclusion, the Tribunal's judgment focused on the interpretation of Rule 6 of the CENVAT Credit Rules, 2004, and the legal requirements for reversing credit availed before obtaining completion certificates for construction projects. The decision provided clarity on the applicability of the rule during the relevant period and emphasized the settled legal position regarding the reversal of credit in such scenarios. The Tribunal's analysis considered the appellant's arguments, relevant legal precedents, and the specific circumstances of the case to reach a well-founded conclusion in favor of the appellant.