2020 (4) TMI 42 - AT - Service Tax

Recovery of CENVAT Credit along with interest and penalty - admissibility of CENVAT Credit availed by the Appellant for providing the output service of renting of immovable property - inputs, input services and capital goods used in the construction of the Hall for providing RIP service - Period of dispute from 1 April, 2007 to 31 March, 2010 - HELD THAT - The issue as to whether the CENVAT Credit availed for the construction of a Mall and subsequent renting has been considered time and again by the High Courts and the Tribunal - reliance can be placed in the case of Dymos India Automotive 2018 (9) TMI 1135 - MADRAS HIGH COURT , Navaratna S.G. Highway 2012 (7) TMI 316 - CESTAT, AHMEDABAD and Vodafone Mobile Services 2018 (11) TMI 713 - DELHI HIGH COURT . In view of the aforesaid decisions of the High Courts, there is no manner of doubt that CENVAT Credit availed by the appellant on inputs, inputs services and capital goods service used for construction of the Mall, which was ultimately let out could not have been denied to the appellant. The findings to the contrary recorded by the Commissioner cannot be sustained and are, accordingly, set aside. Interpretation of statute - HELD THAT - It clearly transpires from the reply filed by the appellant as also from the documents enclosed in the appeal that even though the period in dispute may be from 1 April, 2011 to 31 March, 2012, but the input services were received by the appellant prior to 1 April, 2011 - The clarification contained in the Circular dated 29 April, 2011, clarifies that credit on such service shall be available if its provision had been completed before 01.04.2011 - thus, CENVAT Credit could not have been denied to the appellant for this reason. Impugned order do not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Admissibility of CENVAT Credit on inputs, input services, and capital goods used in the construction of a commercial Mall.
2. Applicability of the amendment in the definition of "input" and "input services" effective from 1 April 2011.

Detailed Analysis:

1. Admissibility of CENVAT Credit:

The primary issue in this appeal was whether the appellant was entitled to avail CENVAT Credit on inputs, input services, and capital goods used in the construction of a commercial Mall, which was subsequently rented out for commercial purposes under the "renting of immovable property" service. The Commissioner had denied the CENVAT Credit on the grounds that the construction of the immovable property was independent of the renting activity and that no service tax was leviable on the construction itself. The Commissioner concluded that since the construction of the immovable property did not attract service tax, the appellant could not avail CENVAT Credit on the inputs, input services, and capital goods used in the construction.

The appellant contended that the inputs, input services, and capital goods used in constructing the Mall had a direct nexus with the provision of the output service (renting of immovable property). The appellant relied on various judgments, including those of the Andhra Pradesh High Court in *Commissioner of Central Excise, Vishakhapatnam-II vs. Sai Sahmita Storages (P) Ltd.*, the Madras High Court in *Commissioner of GST & Central Excise, Chennai-40 vs. M/s. Dymos India Automotive Pvt. Ltd.*, and the Delhi High Court in *Vodafone Mobile Services Ltd. vs. Commissioner of Service Tax, Delhi*. These judgments supported the view that without the construction of the building, renting of immovable property services could not be provided, and therefore, the construction service is an eligible service for credit for providing the output service of renting of immovable property.

The Tribunal, after considering the submissions and relevant case laws, concluded that the CENVAT Credit availed by the appellant on inputs, input services, and capital goods used for constructing the Mall, which was ultimately let out, could not have been denied. The findings of the Commissioner were set aside.

2. Applicability of the Amendment in the Definition of "Input" and "Input Services":

The second issue was whether the amendment made effective from 1 April 2011 in the definition of "input service" would apply to the appellant's case. The period of dispute was from 1 April 2011 to 31 March 2012. The appellant argued that the services were received before 1 April 2011, and thus, the amendment would not apply. The appellant relied on a CBEC Circular dated 29 April 2011, which clarified that CENVAT Credit on input services would be available if the service had been provided before 1 April 2011.

The Commissioner had not examined whether the input services were received before 1 April 2011 and merely observed that the appellant would not be entitled to avail CENVAT Credit due to the amendment. The Tribunal noted that the appellant had specifically stated that the input services were received before 1 April 2011 and provided relevant documents to support this claim.

The Tribunal referred to the CBEC Circular, which clarified that credit on services received before 1 April 2011 would be available if the provision had been completed before that date. Consequently, the Tribunal concluded that CENVAT Credit could not have been denied to the appellant based on the amendment.

Conclusion:

The Tribunal set aside the impugned order dated 23 July 2014 and allowed the appeal, holding that the appellant was entitled to avail CENVAT Credit on inputs, input services, and capital goods used in the construction of the Mall, and the amendment effective from 1 April 2011 did not apply to the services received before that date.