2018 (4) TMI 1043 - AT - Service Tax

CENVAT credit - appellant being a hotel - input services - construction service which was used for constructing additional rooms and repairing of some hotel rooms - Rule 6(5) of CCR 2004 - Held that - the overall hotel business is rendered within the common hotel building and the construction service received in respect of construction of any part of the hotel is a common input service which has nexus with overall hotel business - In appellant s own case M/s. Lemon Tree Hotels Pvt. Ltd. Versus CST Chennai 2018 (1) TMI 1215 - CESTAT CHENNAI the Chennai bench of this Tribunal observed that building constructed for the hotel is used for renting of the services of the hotel and accordingly CENVAT credit is admissible u/r 6(5). Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues involved: Whether the appellant, a hotel, is entitled to CENVAT credit for 'construction service' used in constructing additional rooms and repairing hotel rooms.

Analysis:
1. Submission by Appellant: The appellant's representative, a Chartered Accountant, argued that the construction service used for building rooms and repairing hotel rooms is an input service essential for providing overall hotel services. He contended that even if some activities in the hotel are non-taxable, the construction service credit is admissible under Rule 6(5) of CENVAT Credit Rules 2004. He cited a previous Tribunal order and a judgment to support his argument.

2. Revenue's Argument: The Revenue representative countered that the appellant only pays service tax for specific services unrelated to the construction service used exclusively for non-taxable activities. Therefore, Rule 6(5) should not apply to allow the credit.

3. Tribunal's Decision: The Tribunal examined the case and noted that the appellant availed CENVAT credit for construction services used in building and renovating hotel rooms. The key issue was the eligibility of CENVAT credit as per Rule 6(5). The Tribunal disagreed with the Revenue's argument, stating that the construction service had a nexus with the overall hotel business conducted within the common hotel building. Therefore, the credit was deemed admissible under Rule 6(5). The Tribunal referenced a similar case from the Chennai bench where CENVAT credit was allowed for a hotel building used for renting hotel services. Consequently, the Tribunal set aside the impugned order, ruling in favor of the appellant.

4. Conclusion: The Tribunal allowed the appeal, emphasizing that the construction service used in the hotel building, despite some non-taxable activities, qualified for CENVAT credit under Rule 6(5). The decision was based on the common usage of the hotel building for both taxable and non-taxable services, establishing the nexus required for credit eligibility.