2012 (11) TMI 574 - AT - Service Tax

Input services - rule 2(l) - interpretation of the expression used for providing a output service - appellant engaged in providing taxable services falling under category of renting of immovable property services Held that - Immovable property is neither subjected to central excise duty nor to service tax and input credit of service tax can be taken only if the output is a service liable to service tax or a goods liable to central excise duty. Following the decision in Vandana Global Ltd. v. CCE 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) , decided against the assessee.

Summary

Issues:
1. Wrong availment of cenvat credit under commercial or industrial construction services for construction of an immovable property.
2. Interpretation of input service under Rule 2(l) of Cenvat Credit Rules, 2004.
3. Applicability of CBEC Circular No. 98/1/2008-ST.
4. Comparison of definitions of input under Rule 2(k) for excise duty and service tax.
5. Analysis of judgments in similar cases.
6. Whether immovable property service is liable to service tax.
7. Validity of Hon'ble Supreme Court judgment in CCE v. Ratan Melting & Wire Industries.
8. Consideration of penalty and interest waiver.

Analysis:

1. The case involved M/s. Venus Investments wrongly availing cenvat credit under commercial or industrial construction services for constructing an immovable property. The Revenue contended that such services did not qualify as input services for output services or immovable property services under Cenvat Credit Rules, 2004. The original adjudicating authority disallowed the credit and ordered recovery along with penalties, leading to the present appeal.

2. The appellant argued that the CBEC Circular clarified that construction services should be provided for output services, which are taxable. They relied on the definition of "input service" under Rule 2(l) of the Cenvat Credit Rules, emphasizing that all goods used for providing any output service are covered. The Tribunal referred to a previous case to differentiate the definitions of inputs for excise duty and service tax.

3. The department contended that immovable property services are not liable to service tax, and input credit can only be claimed if the output is a service taxable under service tax or goods liable to central excise duty. The appellant's reliance on a Supreme Court judgment regarding CBEC circulars was deemed unsustainable, as the circulars are binding on authorities under respective statutes, not the Supreme Court.

4. The Tribunal examined legal pronouncements and found the Revenue's contentions valid. The appeal by M/s. Venus Investments was rejected, upholding the order-in-Appeal. The Tribunal did not find grounds to waive penalties or interest, considering the intention to wrongly avail cenvat credit and non-payment of a significant portion of the demand.

5. The judgment highlighted the importance of correctly interpreting the definitions of input services under the Cenvat Credit Rules and the implications of claiming credit for services related to immovable property. The decision emphasized adherence to legal provisions and precedents in determining the eligibility of cenvat credit, ultimately upholding the Revenue's position in this case.