2014 (9) TMI 35 - AT - Service Tax

Cenvat Credit - capital goods, input and input services used for making of immovable property, which is further put to renting of immovable property service - Held that - The definition of inputs is limited to the definition of input services as can be seen from the definitions. Credit of duty paid on inputs is available when the inputs are used for providing an output service . Therefore, there is a need to say that the inputs have been used for providing an output service . In the case of input service , the definition includes input services used by a provider of taxable service for providing an output service. Therefore the definition of input and input service are pari-materia as far as the service providers are concerned. That being the position, the decision of the Hon ble High Court of Andhra Pradesh in the case of CCE, VISAKHAPATNAM-II Versus SAI SAHMITA STORAGES (P) LTD. 2011 (2) TMI 400 HC) would be applicable to the present case. In that case also, the Hon ble High Court took the view that without use of cement and TMT bars for construction of warehouse assessee could not have provided storage and warehousing service . In this case also, without utilizing the service, mall could not have been constructed and therefore the renting of immovable property would not have been possible

Summary

Issues involved:
Admissibility of CENVAT credit on inputs, capital goods, and input services used for creating immovable property for renting services.

Detailed Analysis:

Issue 1: Admissibility of CENVAT credit on inputs and input services for immovable property creation:
The case involved a dispute regarding the admissibility of CENVAT credit on inputs, capital goods, and input services used for creating immovable property for renting services. The Adjudicating authority initially held that such credit would be admissible as the inputs and services were used in creating a property for providing output services of renting immovable properties. However, the Commissioner Central Excise & Customs, Vadodara-II, in the Orders-in-Revision, contended that immovable property is neither service nor goods, citing a CBEC Circular. The appellant argued that credit should be allowed based on precedents like Navratna S.G. Highway Prop. Pvt. Limited case.

Issue 2: Interpretation of input services for CENVAT credit eligibility:
The appellant relied on various case laws to support the admissibility of CENVAT credit on input services used in the construction of immovable property for renting services. The Revenue argued that since immovable property is not goods or services, the credit on inputs and services used in its creation should not be allowed. The appellant contested this argument by referring to Rule 2(l) of the CENVAT Credit Rules, emphasizing that the inputs and services were used for providing an output service, making them eligible for credit.

Judgment:
After considering the arguments and case records, the Tribunal observed that the issue of admissibility of CENVAT credit on inputs and input services for creating immovable property had been settled in previous cases. The Tribunal referred to the definition of inputs and input services under the CENVAT Credit Rules and concluded that the inputs and services used in the construction of the property were essential for providing the output service of renting immovable properties. The Tribunal cited precedents and held that the appeals filed by the appellant were required to be allowed, thereby allowing the CENVAT credit on inputs and services used in creating immovable property for renting services.

In conclusion, the Tribunal allowed the appeals filed by the appellant, emphasizing the admissibility of CENVAT credit on inputs, capital goods, and input services used in the creation of immovable property for renting services, based on established legal principles and precedents.