2013 (4) TMI 146 - AT - Service Tax

Scope of input services - Rule 2(l) - whether the input services for the output service of Commercial or Industrial, Construction Services can be accepted as input services for Renting of Immovable Property as well. - Held that - all the services on which CENVAT credit was availed by the appellant were input services for Commercial or Industrial Construction service which were rendered to the appellant by the contractors. As far as the appellant is concerned, the output service rendered by the contractors, viz. Commercial or Industrial Construction service was the input service and the service tax paid thereon should have been availed and utilized for payment of service tax on the output service of Renting of Immovable Property . It would appear that the input services which were used in the construction of the building by the appellants contractors are far removed from the appellants output service so that no nexus can be claimed between those input services and the appellants output services . This is the view which this bench took in the case of Millennia Realtors Pvt. Ltd. 2013 (4) TMI 153 - CESTAT, BANGALORE and, therefore, the cited Stay Order would operate against the appellant. Prima facie, the appellant has no case against the impugned demand of service tax which arises out of wrong utilization of CENVAT credit. Coming to the plea of limitation, again, we have not found any strong case for the appellant. - stay granted partly.

Summary

Issues:
1. Whether input services for 'Commercial or Industrial Construction Services' can be considered as input services for 'Renting of Immovable Property.'
2. Whether the appellant's utilization of CENVAT credit was correct.
3. Whether the extended period of limitation is applicable due to alleged suppression of facts.
4. Whether the appellant should be required to make a full deposit of the service tax demanded.

Analysis:

Issue 1:
The appellant sought waiver and stay of an amount demanded as service tax on 'Renting of Immovable Property' due to denial of CENVAT credit utilized for payment of service tax. The services used for construction were considered input services for 'Commercial or Industrial Construction Services,' not for 'Renting of Immovable Property.' Previous cases indicated a nexus between certain services and 'Renting of Immovable Property,' but not for all services. The appellant's case lacked a strong argument against the demand arising from the incorrect utilization of CENVAT credit.

Issue 2:
The appellant argued that the CENVAT credit was correctly availed, but the utilization was questioned. The Commissioner found the credit availed in order for 'Commercial or Industrial Construction Service,' not for 'Renting of Immovable Property.' The appellant's disclosure in service tax returns did not conclusively show the correct utilization of credits. The bench found the appellant's case arguable on the limitation issue but lacked a strong defense against the demand.

Issue 3:
The appellant contended that the extended period of limitation was not applicable due to the disclosure in the returns. However, the bench noted that the disclosures were insufficient for the department to infer the correct utilization of credits. While the appellant could argue on the limitation issue, there was no conclusive evidence to support the claim of no suppression of facts.

Issue 4:
Considering the debatable nature of the limitation issue, the bench refrained from requiring a full deposit of the demanded service tax. Instead, the appellant was directed to pre-deposit a specified amount within a timeframe. Compliance with this directive would lead to a waiver of pre-deposit and stay of recovery for penalties and the remaining service tax and interest.

In conclusion, the judgment highlighted the lack of a strong case by the appellant against the demand for service tax arising from the incorrect utilization of CENVAT credit. The bench emphasized the need for a nexus between input and output services for credit utilization and found the appellant's arguments lacking in this regard. Compliance with the pre-deposit directive was deemed necessary to secure a waiver and stay of recovery for the penalties and remaining tax amount.