2022 (4) TMI 830 - AT - Service Tax

CENVAT Credit - input service - amount paid to the broker / property consultant for purchasing the immovable property to be used for providing output service of renting of immovable property - Extended period of limitation - HELD THAT - From the definition of input service, it is clear that any service used by provider of taxable service for providing an output service is admissible input service. In addition, the input service specifically include among other services as are being utilised, the services used in relation to setting up of factory or premises of the provider of output services. Though vide an amendment in rule 2(l), the words setting up were omitted with effect from 1.4.2011 but the period here is 2009 to 2010 i.e. prior the said amendment. Thus the services used for setting up of premises from where the output service has to be provided are to be treated as input service and would be eligible for CENVAT credit. This Tribunal Mumbai Bench in the case of M/S VAMONA DEVELOPERS PVT LTD VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, PUNE-III 2015 (12) TMI 1111 - CESTAT MUMBAI has held that when the output service was the service of renting of a mall any service for getting that mall constructed is an eligible input service. Tribunal in the case of M/S BELLSONICA AUTO COMPONENT INDIA PVT LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI-III, GURGAON 2014 (3) TMI 876 - CESTAT NEW DELHI held that the services of installation is the services clearly covered under the services of setting up of the premises. It was held that setting up of factory has a nexus with the manufacturer of final product and accordingly the services are eligible inputs service. Even service of pipeline laying is held to be eligible input service for providing output service of transportation of gas as it was held by this Tribunal in case of RELIANCE GAS TRANSPORTATION INFRASTRUCTURE LTD. VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI II 2016 (8) TMI 91 - CESTAT MUMBAI . The amount in question is the amount given to the person who rendered the services of getting purchased the immovable property through which the output service of renting of immovable property could not have been provided. The brokerage/ consultancy services received for setting up of said immovable property is accordingly held to be an eligible inputs service. Extended period of limitation - HELD THAT - Admittedly the demand has been raised for the period 2009 to 2010 but it has been raised vide Show Cause Notice in the year 2014. The demand is absolutely for a period more than one year/ 18 months. The Show Cause Notice has been issued invoking proviso to section 11B of Central Excise Act, 1944. But it is clear that the proviso can be invoked only in case where there is any allegations of fraud or suppression of facts that too with an intent to evade payment of duty is found against the appellant. In the present case as has already mentioned above, admittedly the appellant is regularly discharging the Service Tax liability ST 3 return are also being regularly filed, even the broker i.e. M/s Arora Associates was duly registered with the Service Tax department ( as already mentioned above) there remains no question of evasion of duty - the facts otherwise had come to the notice of the department at the time of audit of appellant s record in the year 2010. The show cause notice was still issued after four years later. The above said show cause notice proviso for invoking the extended period has wrongly been confirmed by the Adjudicating Authority. Hence it is clear that the Department has wrongly invoked the extended period. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility of CENVAT credit for services of renting immovable property.
2. Invocation of extended period of limitation for demand raised.

Eligibility of CENVAT Credit:
The appellant, engaged in renting immovable property services, faced a demand for availing input service credit based on bills from a property broker. The appellant argued that services for purchasing immovable property, essential for providing output services, qualify as eligible input services under the CENVAT Credit Rules, 2004. The appellant contended that no direct nexus is required between input and output services, citing relevant case laws. The Tribunal analyzed the definition of "input service" under section 2(l) of the rules, emphasizing services used for setting up premises for output services are eligible. Precedents like Liugong Indian Pvt Ltd. and Vamona Developers Pvt. Ltd. supported the inclusion of services related to setting up premises as eligible input services. The Tribunal ruled in favor of the appellant, holding that brokerage services for purchasing immovable property qualify as eligible input services for renting immovable property output services.

Invocation of Extended Period of Limitation:
Regarding the extended period of limitation for the demand raised from 2009 to 2010 in a 2014 notice, the Tribunal scrutinized the invocation of the proviso to section 11B of the Central Excise Act, 1944. It was noted that the proviso applies only in cases of fraud or suppression of facts to evade duty payment. The appellant had regularly filed ST 3 returns, and the broker was registered with the Service Tax department, negating any evasion of duty. The Tribunal found no intentional non-payment of duty, as observed in the case of Rajasthan Spinning & Weaving Mills. The Tribunal concluded that the department wrongly invoked the extended period, setting aside the order and allowing the appeal due to the lack of legal sustainability in the findings.

This detailed analysis of the legal judgment from the Appellate Tribunal CESTAT NEW DELHI highlights the issues of CENVAT credit eligibility for renting immovable property services and the invocation of the extended period of limitation for the demand raised. The judgment provides a comprehensive examination of the relevant legal provisions, case laws, and factual circumstances to arrive at a reasoned decision in favor of the appellant on both issues.