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TMI Blog2019 (12) TMI 331X X X X Extracts X X X X X X X X Extracts X X X X ..... view taken was that right to use of the immovable property, being the output liable to service tax and not the property per se, credit would not be available. It was clearly held in the decision of the Tribunal in Musaddilal Projects Ltd v. Commissioner of Central Excise, Customs Service Tax [2017 (4) TMI 951 - CESTAT HYDERABAD] that, without the establishing of the property, right to use would not come into being. It is inconceivable that a structure which is to be utilized for service can be alienated from the right to use - In re Dymos India Automotive Pvt Ltd, [2018 (9) TMI 1135 - MADRAS HIGH COURT] the Hon ble High Court of Madras has also taken the view that requirement of construction of a building is a necessary pre-condition for rendering the service. Appeal allowed - decided in favor of appellant. - Excise Appeal No: 1556 of 2011 - A/86491/2019 - Dated:- 18-7-2019 - HON BLE MR C J MATHEW, MEMBER (TECHNICAL) AND HON BLE MR AJAY SHARMA, MEMBER (JUDICIAL) Ms Rinky Jassuja, Advocate for the appellant Shri Ajay Kumar, Additional Commissioner (AR) for the respondent ORDER PER: C J M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... III [2016 (41) STR 833 (Tri.Mumbai)], Oberoi Mall Ltd v. Commissioner of Service Tax, Mumbai II [2017 (47) STR 292 (Tri.-Mumbai)] and Nirlon Ltd v. Commissioner of Central Excise, Mumbai [2016-TIOL-1571-CESTAT-MUM] support the stand taken by the appellant. 3. According to Learned Authorised Representative, fundamental to eligibility for CENVAT credit is title to the property in the building in the construction of which the said inputs/input services were used but which has not been evidenced and submits that providers of industrial and commercial constructions service are excluded from entitlement to credit. It is also contended that there was no contingency in which departmental officers could deviate from the circulars and instructions of Central Board of Excise and Customs. It is also pointed that the Hon ble High Court of Madras, in Commissioner of GST Excise, Chennai v. Dymos India Automotive Pvt Ltd [2019 (365) ELT 26 (Mad.)], has held that 9. The Tribunal took note of the allegations in the said show cause notice i.e. the assessee was not eligible for input service credit availed under the head commercial or industrial construction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of capital goods and further used in the factory of manufacture . It is clear from the language of the Explanation that it is applicable only to manufacturer and not service provider. Therefore the finding of the Commissioner that credit on inputs such as cement, iron and steel used for construction of premises of service provider is not eligible as per Explanation 2 of the definition is contrary to law. 11. Be that as it may, in the case of Vandana Global Ltd., (supra) the Larger Bench took the view that this amendment has retrospective application. The said judgment has been considered by the Hon ble Jurisdictional High Court in the case of Mundra Ports Special Economic Zone Ltd., (supra) wherein it was opined by the jurisdictional High Court that the amendment made in Explanation 2 does not have retrospective application. The definition of inputs prior to 1-4-2011 as noticed above would show that, sub-clause (ii) deals with the inputs used for providing any output service. There is apparently no restriction in the use of goods by service provider except for those items specified in sub-clause (ii) of the definition. Similar issue has been considered in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sustained as the Hon ble High Court set aside the said decision. Further, when words of statute are clear and meaning is unambiguous, intention of statute gets irrelevant. In our view, the plain meaning of the statute should not be distorted by following the interpretation based on intention. 12. The above definitions have been examined by the Hon ble High Courts and the Tribunal in various decisions. The Andhra Pradesh High Court in the case of CCE, Vishakhapatnam v. Sai Samhita Storages (P) Limited - 2011 (270) ELT 33 (A.P.) = 2011 (23) STR 341 (A.P.) allowed Cenvat credit on cement and steel for construction of warehouse. It has been observed that the assessee could not provide storage and warehousing services without constructing by cement and steel and the Central Excise duty was paid on these items. The Hon ble High Court, on plain reading of definition of input and input services under Rule 2(k) and 2(l) of the said Rules, observed that both the definitions would show that unless excluded all goods used in relation to manufacture of final products or for any other purpose used by a provider of taxable service for providing an output service are eligible for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Oil used as a heating medium in the manufacture of LAB is an eligible input since it has a persuasive role in the manufacturing process and without its use it is impossible to manufacture the final product. Therefore, none of the categories in the inclusive part of the definition would constitute relevant consideration per se. They become relevant only when the above crucial requirement of being used in or in relation to the manufacture stands complied with. In our view, one has to therefore read the definition in its entirety. 9. There is no dispute, in these cases, that the assessee used cement and TMT bar for providing storage facility without which storage and warehousing services could not have been provided. Therefore, the finding of the original authority as well as the appellate authority are clearly erroneous, which was correctly rectified by the CESTAT. Insofar as the levy of penalty under Rule 15(2) of the Rules is concerned, unless and until there is a finding that there was suppression of fact, and irregular claim of Cenvat credit, the question of levying penalty under Rule 15(2) of the Rules does not arise. In that view of the matter, the order lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premises of provider of output service or an office relating to such premises. On the analysis of the definition, it becomes dear that the input service is not limited to the services for providing output service, but it also includes the service for setting up the premises of provider of output service. In the present case the input services are Architect Services, Consulting Engineers Services, Management Consultancy Services, etc. used for setting up the premises i.e. stadium of provider of output service i.e. the appellant. The output service is renting of stadium and other miscellaneous services. In view of this undisputed position of law, the services, used by the appellant for setting up the stadium, are input services and squarely covered by definition of Input service as reproduced above. The Board Circular appears to have travelled absolutely contrary to the clear and plain language of the definition of the input service. It is very pertinent that legislators knowing fully that there is no tax or excise duty on the constructing premises of the output service provider, included services used for setting up of the premises of provider of output service, for the simple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed the Cenvat credit in respect of input services used for construction of godown/other immovable properties which were used for renting services. In another case of Sai Samhita Storages Pvt. Ltd., passed by Tribunal s Bangalore Bench which was upheld by the Hon ble High Court of Andhra Pradesh, the fact was that cement and TMT bars were claimed as inputs for construction of warehouse which was used for providing storage and warehouse services . The Hon ble High Court held that without use of cement TMT bars storage and warehouse services could not have been provided, accordingly Cenvat credit was allowed on cement and TMT bars. In view of the above findings, not only by this Tribunal but also endorsed by the Hon ble High Court of Andhra Pradesh that the Cenvat credit on inputs and input services are admissible for construction, which is used for providing output services. We are also of the considered view that in the present case the appellant has clearly entitled for Cenvat credit in respect of all the services used for construction/setting up the stadium which is admittedly used for providing the output services. 6. Likewise, in re Oberoi Mall Ltd, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld in the favour of the appellant. We do not find any reason to deviate from such a view already taken on this issue. 8. As regard the judgment relied upon by the departmental representative in the case of Galaxy Mercantile Ltd. (supra), we find that Hon ble High Court of Allahabad has only affirmed a prima facie view on pre-deposit of amount. The view expressed by the Hon ble High Court is only prima facie view. In the case of Navaratna S.G. Highway Properties (P) Ltd. (supra) and various judgments, the Tribunal has taken the final view while disposing the appeals. 7. Likewise, in re Nirlon Ltd, it was held that 6.1 We are not in agreement with the findings recorded by the adjudicating authority for more than one reason. (a) Firstly, it is not disputed that appellant had discharged appropriate service tax liability under the category of Renting of Immovable Property. In our considered view the service tax liability on renting of immovable property will not arise unless the immovable property comes into an existence, such immovable property will be in the nature of constructed building/warehouse. In the case in h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (4) read with the Service Tax Rules, 1994 made in exercise of the powers under Section 94 of the Finance Act. There is no dispute that every provider of taxable service is entitled to claim CENVAT credit in relation to input service. Rule 2(k) and (l) of the Rules are relevant and they read as under. 2. Definitions. (k) input means all goods, except light diesel oil, high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, within the factory of production; all goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service; Explanation 1. - The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal products qualify as input. This presupposes that the clement of manufacture must be present. 3.2 The definition of inputs is limited to the definition of input services as can be seen from the definition given above. Credit of duty paid on inputs is available when the inputs are used for providing an output service. Therefore, there is a need to say that the inputs have been used for providing an output service. In the case of input service, the definition includes input services used by a provider of taxable service for providing an output service. Therefore the definition of input and input service are pari materia as far as the service providers are concerned. That being the position, the decision of the Honble High Court of Andhra Pradesh would be applicable to the present case. In that case also, the Honble High Court took the view that without use of cement and TMT bars for construction of warehouse assessee could not have provided storage and warehousing service. In this case also, without utilizing the service, mall could not have been constructed and therefore the renting of immovable property would not have been possible. The issue involved is square ..... X X X X Extracts X X X X X X X X Extracts X X X X
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