2022 (12) TMI 472 - HC - Service Tax

CENVAT Credit - inputs/ inputs services used for construction of immovable property - utilization of the same to discharge the service tax liability on output services namely, renting of immovable property service - Board's circular No.98/01/2008 ST dated 04.01.2008 issued vide F.No.345/6/2007 TRU - HELD THAT - The assessee therein, was in the business of renting immovable properties and the issue involved was whether the assessee therein was entitled for CENVAT credit on the input and input services consumed or utilized in construction of the Commercial Complex. After considering various authorities, the Tribunal has held that the assessee was entitled to CENVAT credit both on inputs and input services utilized for the construction to be utilized as output service being renting of immovable property. It is not in dispute that the said order passed by the CESTAT, Bengaluru has not been challenged by the Revenue. This appeal does not merit consideration for more than one reason. Firstly, Revenue has accepted the view taken by the Tribunal in M/s. Millennia Realtors. Secondly, assessee is admittedly in the business of renting immovable property. While constructing the immovable properties, assessee would have availed various services and paid input tax. The said building is used by the assessee in its business. Therefore, assessee must be entitled to avail the input services to discharge services on various output services. Appeal dismissed.

Summary

Issues:
Challenge to CESTAT order on Cenvat credit eligibility for construction of immovable property for service tax liability.

Analysis:
The case involved an appeal by the Revenue challenging a CESTAT order allowing Cenvat credit for inputs/services used in constructing immovable property to discharge service tax liability on renting of immovable property service. The main question was whether the CESTAT's finding on the eligibility of the respondent for Cenvat credit was perverse. The Revenue argued against the CESTAT's decision, citing challenges to similar orders in other cases. The assessee relied on a previous case where a similar issue was decided in their favor and accepted by the Revenue.

The High Court analyzed the facts and legal precedents, noting that the assessee, engaged in renting immovable properties, utilized Cenvat credit on input services for construction and output services. Referring to a specific case where a similar issue was decided in favor of the assessee and accepted by the Revenue, the Court found that the Revenue had not challenged that decision. The Court emphasized that the assessee, being in the business of renting immovable property, was entitled to avail input services for discharging service tax on output services.

Consequently, the High Court dismissed the appeal, ruling in favor of the assessee and against the Revenue. The Court highlighted that the Revenue had accepted a similar decision in a previous case, and considering the nature of the assessee's business, upheld the entitlement to avail input services for tax discharge on output services. The judgment concluded without imposing any costs on either party.