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2023 (10) TMI 528 - AT - Service TaxCENVAT Credit - banking and financial service used by the appellant in providing Renting of Immovable Property service - Short paid interest on delayed payment of service tax - Interest rate be 15% or 25% for belated payment of service tax? CENVAT Credit - Banking and financial service used by the appellant in providing Renting of Immovable Property service - HELD THAT - Reliance placed in OBERON EDIFICES ESTATES PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS SERVICE TAX, COCHIN 2023 (9) TMI 769 - CESTAT BANGALORE , it was held that various input services used in providing Rental of Immovable Property service are admissible to CENVAT credit. Following the aforesaid decision of this Tribunal, it is opined that CENVAT Credit availed on banking and financial services used in providing Renting of Immovable Property service is admissible. Demand of differential interest for the respective periods - HELD THAT - The department has specifically alleged in the notice that the appellant had collected rent on monthly basis along with service tax from the tenants; however, they have not deposited service tax so collected as on due date - On being inquired during the course of hearing to place the invoices under which rent was collected from the tennants, the ld. Advocate for the appellant expressed inability to produce a single copy of the invoices. Thus, the appellant could not establish that service tax was not collected earlier, hence could not be deposited before the due date - there are no merit in the contention of the ld. Advocate that their case falls under Sl. No. 2 of Notification No. 13/2016-ST dated 01.03.2016 - the applicable interest would be @24% on the service tax amount paid belatedly even though collected from service receivers. Appeal allowed in part.
Issues involved:
The issues involved in the judgment are (i) whether CENVAT Credit is admissible on banking and financial service used in providing Renting of Immovable Property service; and (ii) the appropriate interest rate for belated payment of service tax. Issue 1: CENVAT Credit on banking and financial service: The appellant, engaged in providing taxable services, availed CENVAT Credit on banking and financial services used in providing Renting of Immovable Property service. The appellant argued that the service falls under the definition of 'input service' as per Rule 2(l) of the Cenvat Credit Rules, 2004. The appellant cited relevant judgments to support their claim, emphasizing that CENVAT Credit on input services for Renting of Immovable Property service is admissible. The Tribunal agreed with the appellant, holding that the CENVAT Credit availed on banking and financial services for providing Renting of Immovable Property service is admissible. Issue 2: Interest rate for belated payment of service tax: Regarding the demand for differential interest on the belated payment of service tax, the department alleged that the appellant collected rent along with service tax but failed to deposit the service tax on time. The appellant disputed this allegation but failed to provide invoices during the hearing to support their claim. As a result, the Tribunal found no merit in the appellant's contention and upheld the department's claim for interest at 24% on the belatedly paid service tax amount. The judgment modified the impugned order, ruling that the CENVAT Credit of Rs. 13,77,515/- is admissible, leading to the setting aside of penalties and levied interest. Additionally, it confirmed the interest rate of 24% for the relevant period, requiring the appellant to pay a total interest of Rs. 17,38,094/- after adjusting any earlier payments. The appeal was disposed of accordingly on 12.10.2023.
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