2014 (3) TMI 43 - AT - Central Excise

Denial of Input service credit - Services utilized in the residential colonies - Qualification as input service as per sub-rule 2(l) of the Cenvat Credit Rules, 2004 - Invocation of extended period of limitation - Held that - input service credit taken on the services provided in the residential colony is not available. Therefore, the issue is no more res integra. Accordingly, the demands are confirmed, but I find that the show cause notice has been issued by invoking extended period of limitation - demand for normal period of limitation is confirmed. Further, as the extended period is not invokable, therefore mandatory under Section 11AC is waived - Decided in favour of assessee.

Summary

Issues: Denial of input service credit for services in residential colonies; Applicability of sub-rule 2(l) of Cenvat Credit Rules, 2004; Invocation of extended period of limitation.

Analysis:
1. Denial of Input Service Credit: The judgment addresses the denial of input service credit to the applicant for services utilized in residential colonies, citing that such services do not qualify as input service under sub-rule 2(l) of the Cenvat Credit Rules, 2004. The period under consideration is from April 2008 to December 2009, with a show cause notice issued on 8.12.2010.

2. Applicability of Precedent: The judge notes that the issue is no longer res integra, referencing the decision of the Hon'ble Supreme Court in the case of Maruti Suzuki Ltd. vs. CCE, Delhi-II. The Supreme Court ruling established that input service credit for services provided in residential colonies is not permissible. Consequently, the judge confirms the demands but highlights that the show cause notice invoked an extended period of limitation.

3. Invocation of Extended Period: While confirming the demands for the normal period of limitation, the judge deems the invocation of the extended period as inappropriate. Given the dispute before the apex court regarding the availability of input service credit for services provided in residential colonies, the judge rules that the extended period of limitation should not have been applied. Consequently, the demand for the extended period is not upheld, and the mandatory provisions under Section 11AC are waived.

4. Disposition of the Appeal: In conclusion, the judge disposes of the appeal, confirming the demands for the normal period of limitation while waiving the extended period. The stay application is also disposed of accordingly, aligning with the terms outlined in the judgment.

This detailed analysis of the judgment highlights the key issues addressed, the legal reasoning applied, and the final disposition of the appeal in relation to the denial of input service credit for services in residential colonies under the Cenvat Credit Rules, 2004.