2018 (3) TMI 1127 - AT - Service Tax

CENVAT credit - input/input service/capital goods used for constructing the mall - denial on the ground that the mall is a immoveable property - Held that - the CENVAT credit is admissible in respect of input service and capital goods used for construction of mall against renting of mall on which service tax was paid - in City Centre Mall Nashik Pvt. Ltd. 2017 (11) TMI 301 - CESTAT MUMBAI wherein the identical facts and the law point was involved, where the cenvat credit in respect of the inputs used for construction of mall was allowed. The appellant have shown the entire credit as opening balance of the April 2011 whereas in the month of March 2011 the closing balance was nil - whether the appellant is entitled for the credit in respect of inputs, input service and capital goods received and used prior to 1.4.2011 for construction of mall? - Held that - it is only a clerical error on the part of the appellant in making entry of CENVAT credit which was otherwise admissible to them. Even if the entry of CENVAT credit on individual services are made on the date of receipt or the consolidated amount for the said credit was shown as opening balance of credit of April 2011 so long there is no dispute about the amount of the credit. CENVAT Credit cannot be denied only for such clerical error. The appellant is not entitled for cenvat credit, in respect of input however they are entitled for cenvat credit in respect of input service and capital goods, accordingly the adjudicating authority may re quantify the demand - appeal allowed by way of remand.

Summary

Issues involved:
1. Admissibility of cenvat credit on inputs, input service, and capital goods used for constructing a mall against the output service of renting the mall.
2. Correctness of availing cenvat credit for inputs, input service, and capital goods received and used prior to a specific date for the construction of the mall.

Analysis:
Issue 1:
The appellant, engaged in various services, availed cenvat credit for constructing a mall against the renting of the mall. The appellant contended that previous judgments allowed such credit. The Revenue argued that since the construction became the output service, not renting, the credit was inadmissible. The Tribunal considered past judgments and held that while credit for inputs used in construction was disallowed, credit for input service and capital goods was permissible against renting services. The Tribunal maintained consistency with previous decisions unless substantial changes occurred. The appellant was found entitled to credit for input service and capital goods, and the demand was to be re-quantified.

Issue 2:
Regarding the second issue, the appellant mistakenly showed the entire credit as an opening balance before the completion of mall construction. The Tribunal deemed this a clerical error and held that as long as the credit amount was correct, denial based on clerical errors was unwarranted. Thus, the appellant was not entitled to credit for inputs but could claim credit for input service and capital goods. The penalty imposed was set aside, and the appeal was partly allowed. The judgment was pronounced on 26/02/2018.