2017 (11) TMI 399 - AT - Service Tax

CENVAT credit - duty paying documents - allegation against the appellant is that they availed irregular credit on the invoices in which the service tax was not shown separately - Held that - It is brought out from records that M/s. Sree Venkateswara Enterprises and others to whom the appellant had paid rent filed ST-3 returns reflecting the service tax portion of the rent paid by appellant. Later M/s. Sree Venkateswara Enterprises has issued invoices showing the service tax separately. On these invoices the appellant has taken credit to discharge their service tax liability on output services of subletting of immovable property - appeal allowed - decided in favor of appellant.

Summary

Issues: Disallowance of input service tax credit

Analysis:
The appellant, engaged in Renting of Immovable Property Service and Business Support Service, faced disallowance of input service tax credit amounting to ?14,49,762. The dispute arose from the confusion regarding the taxable nature of renting of immovable property services during the period of 2008-2009 to 2009-2010. The Finance Act, 2008 introduced changes in the definition of Renting of Immovable Property Service, leading to uncertainty. The appellant sublet premises taken on rent and utilized service tax paid to discharge their service tax liability. Initially, the service tax was not shown separately in the rent payments to M/s. Sree Venkateswara Enterprises, but later invoices reflected service tax separately. The appellant argued that there was no irregularity in availing the credit, as they used the service tax paid to discharge their tax liability on output services. The appellant contended that the demand was unsustainable due to the confusion surrounding the taxable nature of the services.

The respondent, however, maintained that since the service tax portion was not shown separately in the rent payments and there was no stipulation in the agreement to pay service tax, the appellant could not claim credit for the service tax paid on renting of immovable property. The respondent reiterated the findings of the impugned order, emphasizing the lack of clarity in the payment of service tax.

After considering the arguments, the Tribunal found that the appellant had not committed any irregularity in availing the credit. The Tribunal noted that M/s. Sree Venkateswara Enterprises and others, to whom the rent was paid, filed ST-3 returns reflecting the service tax portion, and later issued invoices showing service tax separately. The appellant used this service tax credit to discharge their tax liability on subletting of immovable property services. Therefore, the demand for disallowance of input service tax credit was deemed unjustified. Consequently, the Tribunal set aside the impugned order, allowing the appeal with any consequential reliefs.