2013 (4) TMI 580 - AT - Service Tax

Denial of Cenvat credit Input services - appellant is providing the services of renting of immovable property service and availing credits on input services - Revenue contended that the services which are availed are not utilized for providing of output service Held that - Following the judgment of the Hon ble High Court of Mumbai in the case of Coca Cola India Pvt.Ltd. 2009 (8) TMI 106 as their Lordships have categorically stated that the input services would be the services which are used relating to the business activity. In the case in hand, the output service provided by the appellant is intrinsically co-related the services received by them from various service providers. I find that the appellants have made out a case in their favour. Accordingly, the impugned order is liable to be set aside.

Summary

Issues: Eligibility of CENVAT Credit on Service Tax paid on various input services for renting of immovable property service.

The judgment by the Appellate Tribunal CESTAT AHMEDABAD involved the issue of whether the appellant was eligible to avail CENVAT Credit on the Service Tax paid on input services for renting of immovable property service. The appellant had availed CENVAT Credit on services like management, maintenance, repair, advertising, insurance, security, telecommunication, and consultancy services. The appellant contended that these services were necessary for their business of renting godowns and were used for providing output services. The Revenue argued that the services were not utilized for renting immovable property, and hence, the credit was ineligible. The Tribunal considered the submissions and records, noting that the appellant rented out godowns to farmers/traders/dealers and incurred expenses on various services to attract business. The Tribunal referred to previous judgments, including Navaratna S.G. Highway Prop. Pvt.Ltd., which emphasized the need for services to be used for providing output services to avail CENVAT Credit. The Tribunal also cited the judgment of the Hon'ble High Court of Mumbai in Coca Cola India Pvt.Ltd., stating that input services must be related to the business activity. Ultimately, the Tribunal found merit in the appellant's case, set aside the order denying CENVAT Credit, and allowed the appeals, concluding that the services received were intrinsically connected to the output service of renting immovable property.

In conclusion, the Appellate Tribunal CESTAT AHMEDABAD ruled in favor of the appellant, allowing them to avail CENVAT Credit on the Service Tax paid on various input services related to their business of renting immovable property. The Tribunal emphasized the necessity for the services to be used for providing output services to qualify for credit, as highlighted in previous judgments. The decision underscored the intrinsic connection between the input services received and the output service provided by the appellant. The judgment serves as a precedent for cases where the eligibility of CENVAT Credit on input services for specific output services is in question, providing clarity on the criteria for availing such credits in the context of service tax regulations.