2024 (11) TMI 1135 - AT - Service Tax

Denial of Cenvat credit of service tax paid on renting of immovable property service in view of amended definition of input services as provided under Rule 2(l) of Cenvat Credit Rules, 2004 w.e.f. 01.03.2011 - claim denied by the lower authority on the ground that renting of immovable property service falls under the category of setting up of the premises of the output service provider which has been removed from the inclusion clause of the definition of input service. Whether as per the amendment is the service related to setting up and activities relating to business were removed from the inclusion clause of the definition of input service - HELD THAT - We find that only services which are covered under inclusion clause of the definition are not alone eligible for cenvat credit but these services are in addition to all such services which are used in or in relation to providing the output service. In the present case the service of renting of immovable property service is directly used for providing output service of the appellant, therefore, the same is clearly covered under the main clause of the definition of input service in terms of Rule 2(l) of Cenvat Credit Rules, 2004. We find that even subsequently w.e.f 01.04.2011, certain services were excluded from the purview of definition of input service however, the service namely, renting of immovable property service is not covered under the exclusion clause of the definition, therefore, even from 01.04.2011 also the renting of immovable property service continued to be admissible input service for the purpose of availing the cenvat credit. This issue is no longer res-integra as interpreting the removal of setting up in the inclusion clause, the cenvat credit was allowed in NAVIN FLOURINE INTERNATIONAL 2024 (10) TMI 1396 - CESTAT AHMEDABAD as regard the use of service we are of the view that there is no dispute that those services were used in or in relation to the manufacture of the final product. As regard the contention of the revenue that setting up of factory has been removed from the inclusion clause, in our view the removal of from setting up of factory will not make any difference because the inclusive portion is not additional service but it is only clarificatory out of all the services covered in main clause - wherein held as on perusal of the exclusion clause of the definition we find that none of the services which are subject matter in the present appeal is falling in the exclusion clause. Therefore, we have no hesitation to hold that all the services are admissible input service and Cenvat credit is admissible. Thus, the demand of cenvat credit in the present case is not sustainable. Hence the impugned order is set aside and appeal is allowed.

Summary

Issues Involved:

1. Eligibility to avail Cenvat credit on service tax paid for renting of immovable property services under the amended definition of input services in Rule 2(l) of the Cenvat Credit Rules, 2004.
2. Invocation of extended period under Section 73(1) of the Finance Act, 1994 for demand confirmation.
3. Address discrepancy on invoices for availing Cenvat credit.

Detailed Analysis:

1. Eligibility to Avail Cenvat Credit on Renting of Immovable Property Services:

The primary issue revolves around whether the appellant can avail Cenvat credit for service tax paid on renting of immovable property services despite amendments to the definition of input services under Rule 2(l) of the Cenvat Credit Rules, 2004, effective from 01.04.2011. The appellant argued that the removal of "activities relating to setting up" from the inclusion clause does not affect their eligibility, as renting services are directly used for providing output services. The Tribunal supported this view, stating that services used in or in relation to providing output services are covered under the main clause of the definition of input service. The Tribunal cited several judgments, including Navin Flourine International Ltd. and Roquette Riddhi P. Ltd., reinforcing that renting of immovable property services does not fall under the exclusion clause and thus remains eligible for Cenvat credit.

2. Invocation of Extended Period Under Section 73(1) of the Finance Act, 1994:

The appellant contested the invocation of the extended period for demand confirmation, arguing there was no deliberate suppression of facts or willful misstatement. They maintained that all Cenvat credits were duly reflected in their ST-3 returns, negating any concealment. The Tribunal found merit in this argument, referencing the Apex Court's judgment in Anand Nishikawa Co. Ltd., which supports the appellant's position that the extended period is not applicable in the absence of willful misstatement or suppression of facts.

3. Address Discrepancy on Invoices:

The issue of address discrepancy on invoices was also addressed. The appellant argued that the services were received at their factory, even though the invoices bore the head office address. The Tribunal ruled that as long as the input service was received for the appellant's factory, the credit should not be denied solely based on address discrepancies. This view was supported by previous judgments, including Madhya Pradesh Consultancy Organization Ltd. and Rajendra Kumar and Associates, which established that registration of premises or specific address details on invoices are not prerequisites for availing Cenvat credit.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal, affirming the appellant's eligibility to avail Cenvat credit on all contested grounds. The judgment underscores the interpretation of input services and the conditions under which Cenvat credit is admissible, providing clarity on the application of rules post-amendment.