2020 (4) TMI 383 - AT - Service Tax

CENVAT Credit - imported capital goods which were used in construction of the mall - The case of the department is that since the appellant are providing renting of immovable property services, all the capital goods on which credit is taken was used for construction of mall and not for providing the services of renting of immovable property - litter bin, capital goods or not - HELD THAT - The identical issue has been decided in respect of capital goods used for construction of building which is rented out in the case of City Centre Mall Nashik Pvt. Ltd. vs Commissioner of Central Excise Service Tax, Nashik 2017 (11) TMI 301 - CESTAT MUMBAI where it was held that merely by installation of duty paid capital goods, it can not be said that it is immovable goods all the capital goods were used in the shopping mall to facilitate the shop owners for operation of the mall, who have been given the shops on rent by the appellant. Therefore all these capital goods were directly used by the appellant for providing output service i.e. renting of immovable property service. Accordingly the cenvat credit on the capital goods is admissible. The appellant is entitled for Cenvat Credit on capital goods used in construction of mall which was given on rent by providing renting of immovable property service. Litter bin - HELD THAT - The item does not fall under capital goods. However, the same was used as input. Accordingly, the credit under the head input is allowed - Taking credit considering the litter bins as capital goods is a procedural lapse and on that account, credit cannot be denied. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Admissibility of Cenvat credit on capital goods used in construction of a shopping mall for renting of immovable property services.
- Admissibility of credit on litter bins used for maintaining cleanliness in the mall.

Analysis:
1. Admissibility of Cenvat Credit on Capital Goods:
The case involved the appellant constructing a shopping mall and using various imported capital goods for the construction. The appellant also claimed credit on litter bins used for maintaining cleanliness in the mall. The department contended that as the appellant provided renting of immovable property services, the credit on capital goods used for construction should be denied. The appellant argued that the credit on litter bins, although mistakenly taken as capital goods, was used as inputs for output services. The Tribunal referred to previous judgments like City Centre Mall Nashik Pvt. Ltd. and M/s Deepak Fertilizers and Petrochemicals Corporation Ltd. where it was held that credit on capital goods used for construction of buildings rented out is not admissible. However, in the present case, the Tribunal allowed the Cenvat credit on capital goods used in the construction of the mall as they were directly used for providing output services of renting immovable property. The appellant was granted the credit on capital goods.

2. Admissibility of Credit on Litter Bins:
Regarding the credit on litter bins, the Tribunal acknowledged that the item did not qualify as capital goods but was used as an input. The appellant mistakenly treated the litter bins as capital goods. The Tribunal deemed this as a procedural lapse and allowed the credit under the head of inputs. The Tribunal emphasized that even though the litter bins were not capital goods, they were used as inputs for providing output services. Consequently, the appellant was granted the credit for the litter bins.

In conclusion, the Tribunal allowed the appeal, granting the appellant the Cenvat credit on capital goods used in the construction of the mall for renting immovable property services. Additionally, the credit on litter bins, although mistakenly treated as capital goods, was allowed as inputs for output services. The Tribunal highlighted that the procedural lapse in treating the litter bins as capital goods did not warrant denial of credit.