2015 (11) TMI 910 - AT - Service Tax

Availment of CENVAT Credit - whether the services such as Architect Services, Consulting Engineers Services, Management Consultancy Services etc. used for construction of sports stadium are admissible input services for taking Cenvat Credit as against the output service of the appellant i.e. renting of the said stadium and other services on which services, service tax was discharged - Held that - Input service specifically includes amongst others services used in relation to setting up, premises of provider of output service or an office relating to such premises. On the analysis of the definition, it becomes clear that the input service is not limited to the services for providing output service, but it also includes the service for setting up the premises of provider of output service. In the present case the input services are Architect Services, Consulting Engineers Services, Management Consultancy Services etc. used for setting up the premises i.e. stadium of provider of output service i.e. the appellant. Board Circular appears to have travelled absolutely contrary to the clear and plain language of the definition of the input service. It is very pertinent that legislators knowing fully that there is no tax or excise duty on the constructing premises of the output service provider, included services used for setting up of the premises of provider of output services, for the simple reason that if the premises are used for providing the output service, the credit of input services used for setting up the premises of service provider must be allowed. - appellant has clearly entitled for Cenvat Credit in respect of all the services used for construction/setting up the stadium which is admittedly used for providing the output services. - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues involved:
1. Admissibility of Cenvat Credit on services used for construction of sports stadium for renting of immovable property services.

Detailed Analysis:

Issue 1: Admissibility of Cenvat Credit on services used for construction of sports stadium for renting of immovable property services

The case involved a dispute regarding the admissibility of Cenvat Credit on services such as Architect Services, Consulting Engineers Services, and Management Consultancy Services used for the construction of a sports stadium, which was then rented out as immovable property services. The appellant had paid service tax on reverse charge basis for services received from consultants located outside India and had taken Cenvat Credit on the amount paid. However, a show cause notice contended that the credit was inadmissible as per Cenvat Credit Rules, 2004 and a circular by the Central Board of Excise & Customs. The Commissioner confirmed the demand for Cenvat Credit amount and interest but did not impose a penalty.

The appellant argued that the Board Circular was contrary to the definition of 'Input Services' under Rule 2(l) of Cenvat Credit Rules, 2004. The appellant contended that the services used for setting up the stadium, including Architect Services and Consulting Engineers Services, were input services for providing the output service of renting the stadium. The appellant relied on various judgments supporting their position, emphasizing that the services used for construction and setting up the premises of the output service provider should be eligible for Cenvat Credit.

The Revenue, represented by the Commissioner, maintained that the Circular deemed commercial or industrial construction services as input services for immovable property, which was not subject to Central Excise duty or Service Tax. The Revenue argued that as immovable property was neither a service nor goods, input credit could not be claimed. The Commissioner justified the decision based on the binding nature of the Board Circular on departmental officers.

The Tribunal analyzed the definition of 'input service' under Rule 2(l) of Cenvat Credit Rules, 2004, which included services used for setting up the premises of the output service provider. The Tribunal found that the services used for constructing the stadium were indeed input services for providing the output service of renting the stadium. The Tribunal concluded that the Circular was contrary to the definition of input service and cited judgments where Cenvat Credit was allowed on services used for construction of immovable property for renting services. Therefore, the Tribunal set aside the impugned order and allowed the appeal, granting consequential relief as per the law.

In conclusion, the Tribunal held that the services used for constructing the sports stadium were admissible input services for Cenvat Credit against the output service of renting the stadium, based on the clear definition of 'input service' under the Cenvat Credit Rules, 2004, and supported by relevant legal precedents.