2018 (5) TMI 563 - AT - Service Tax

CENVAT credit - input service , prior to amendment of Rule 2(l) of the rules - retail Mall was utilised for providing the taxable services of renting of immovable property - Held that - Since, the appellant has taken the credit prior to 1.4.2011 and the Mall was also completed before 2011, denial of Cenvat benefit, in our considered opinion, cannot be sustained. Tribunal in the case of Navratna S.G. Highway Prop. Pvt. Ltd. Vs. CST, Ahmedabad 2012 (7) TMI 316 - CESTAT, AHMEDABAD has held that the goods and services used for construction of warehouse, which is further used for providing the output service should be available for the Cenvat benefit. Since, there is dispute about the period of taking Cenvat credit, the matter should go back to the original authority for ascertaining the period, when the Cenvat credit was taken by the appellant in its Cenvat account - appeal allowed by way of remand.

Summary

Issues:
1. Dispute over availing Cenvat credit on input services used in constructing a retail Mall.
2. Interpretation of the definition of input service under Rule 2(l) of the Cenvat Credit Rules, 2004.
3. Applicability of the amended definition of input service effective from 1.4.2011.
4. Utilization of Cenvat credit for providing taxable services post-1.4.2011.
5. Compliance with Rule 3 of the Cenvat Credit Rules, 2004.

Analysis:
1. The appellant, a service provider registered with the Service Tax Department, availed Cenvat credit for service tax paid on input services used in constructing a retail Mall at Amritsar, Punjab. The department disputed the credit claiming the services did not qualify as input services under Rule 2(l) of the Cenvat Credit Rules, 2004, especially post the 2011 amendment.

2. The appellant argued that since the credit was availed pre-amendment and the Mall construction was completed before 2011, the disputed services should be considered as input services. The appellant relied on a tribunal decision supporting their stance.

3. The Revenue contended that the amended definition of input service from 1.4.2011 should apply since the Mall was used for providing taxable services post-amendment, making the appellant ineligible for Cenvat credit on disputed services. They also highlighted non-compliance with Rule 3(4) of the Cenvat Credit Rules, 2004.

4. The Tribunal analyzed Rule 3 of the Cenvat Credit Rules, 2004, emphasizing that the utilization of Cenvat credit is determined by when it is availed. Since the credit was taken before 1.4.2011 and the Mall construction completed prior to that, the denial of Cenvat benefit post-amendment was deemed unjustified.

5. Referring to a previous tribunal decision, the Tribunal reiterated that goods and services used for constructing a property for providing output services should be eligible for Cenvat credit. They found no merit in the impugned order, setting it aside and allowing the appeal in favor of the appellant.