2017 (4) TMI 281 - AT - Service Tax

CENVAT credit - input services - setting up of Research Laboratory premises - That department is of the view that since the services relate to immovable property, the credit cannot be allowed - Held that - the disputed services have been received by the appellant and credit taken prior to 01.04.2011 - the Board vide circular No 943/04/2011-CX, dated 29.04.2011 has clarified that the credit is eligible if the services have been availed before 01.04.2011. Needless to say that prior to 01.04.2011, the definition of input services included the services relating to setting up of factory/premises of output service provider. The credit is sought to be denied stating that it relates to immovable property - reliance placed in the case of Maharashtra Cricket Association Versus Commissioner of Central Excise, Pune-III 2015 (11) TMI 910 - CESTAT MUMBAI , where it was held that 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. The credit has been wrongly disallowed - appeal allowed - decided in favor of appellant.

Summary

Issues: Disallowance of credit on input services for setting up Research Laboratory premises.

In this case, the appellant, a service provider, availed services of architects, project management consultants, and civil contractors for setting up a Research Laboratory. The department alleged irregular availment of credit on these services, leading to a demand of ?37,40,313. The Commissioner confirmed the demand along with interest and imposed a penalty. The appellant contended that the services were availed before April 2011 when the definition of input services included setting up of factory/premises of the output service provider. They relied on a circular clarifying credit eligibility before April 2011 and a judgment by CESTAT, Mumbai. The Assistant Commissioner reiterated the findings in the impugned order.

Upon review, it was found that the disputed services were received and credit was taken before April 2011. The Board's circular clarified that credit is eligible if services were availed before April 2011, when the definition of input services covered setting up of factory/premises. The Tribunal highlighted that denying credit for services related to setting up the premises of the output service provider contradicted the definition of input services. Referring to a previous judgment, it emphasized that if the premises were used for providing the output service, credit for services used in setting up those premises must be allowed.

Consequently, it was concluded that the credit was wrongly disallowed. The impugned order disallowing credit was set aside, and the appeal was allowed with any consequential reliefs.