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TMI Blog2020 (4) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. - HON BLE MR. JUSTICE DILIP GUPTA, PRESIDENT HON BLE MR.C.L. MAHAR, MEMBER (TECHNICAL) APPEARANCE: Shri B.L. Narasimhan Ms. Neha Chaudhary, Advocates for the Appellant Shri Radhe Tallo, Authorised Representative for the Respondent JUSTICE DILIP GUPTA: This app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n against immovable property. This providing flaws from the working of Rule 2 (1) (I) of the CENVAT Credit Rules, 2004 itself and the Board Circular No.98/1/2008-ST dated 04.01.2008 only reinforces the meaning of this legal provision in the case of construction of an immovable property. The Circular does not enunciate a new legal position it only interprets the applicability of provision of Rule 2 (1) (i) of the CENVAT Credit Rules, 2004 to a particular context. I therefore, conclude that the noticee are not eligible to avail the CENVAT Credit of inputs and input services used for the construction of immovable property and hence the CENVAT Credit so availed by the Noticee as detailed in the impugned SCNs is required to be disallowed to them in terms of Rule 14 of the CENVAT Credit Rules, 2004. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 9.8 The immovable property for which the noticee have availed CENVAT Credit is neither a service nor goods . In this specific case, the inputs, input services and capital goods on which the demand for the CENVAT Credit utilized has been made, has been used for the construction of immovable property. The building on completion, does not suffer either Central Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uts, input services and capital goods have, therefore, been used by the appellant for the provision of its output service, namely RIP since without these inputs, input services and capital goods, the appellant would not have been able to construct the Mall and rent it out for commercial purposes. Learned Counsel, therefore, submitted that the inputs, input services and capital goods used by the appellant have a direct nexus with the provision of output service and CENVAT Credit was correctly availed by the appellant. In support of this submission, learned Counsel placed reliance upon the judgement of the Andhra Pradesh High Court in Commissioner of Central Excise, Vishakhapatnam-II versus Sai Sahmita Storages (P) Ltd. 2011 (23) S.T.R. 241 (A.P.) and the judgement of the Madras High Court in Commissioner of GST Central Excise, Chennai-40 vs. M/s.Dymos India Automotive Pvt. Ltd. 2018 - TIOL - 1947- HC MAD ST as also to the judgment of the Delhi High Court in Vodafone Mobile Services Ltd. vs. Commissioner of Service Tax, Delhi 2018 - TIOL - 2409 HC - DEL ST . Learned Counsel also placed reliance upon the following decisions of this Tribunal:- 1. DB Mall Pvt. Ltd. vs. CGST, C.E. C.C., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hall for providing RIP service. 12. In order to appreciate the issue, it would be appropriate to refer to the relevant provisions of the 2004 Rules. 13. Capital goods , inputs and input services have been defined in sub-clauses (a), (k) and (l) respectively of rule 2 and are reproduced below:- (a) capital goods means:- (A) the following goods, namely:- (i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading No. 68.05 grinding wheels and the like, and parts thereof falling under heading 6804 of the First Schedule to the Excise Tariff Act; (ii) pollution control equipment; (iii) components, spares and accessories of the goods specified at (i) and (ii); (iv) moulds and dies, jigs and fixtures; (v) refractories and refractory materials; (vi) tubes and pipes and fittings thereof; and (vii)) storage tank, used- (1) in the factory of the manufacturer of the final products, but does not include any equipment or appliance used in an office; or (2) for providing output service; (B)) motor vehicle registered in the name of provider of output service for providing taxable service as specified in sub-clauses (f), (n), (o), (zr), (zzp), (zzt) and (zzw) of clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l provides that a provider of taxable service shall be allowed to take credit to be called CENVAT Credit on any input service by the provider of output service. Sub-rule (4) of rule 3 provides that the CENVAT Credit may be utilized for payment of service tax on any output service. 15. The contention of the appellant is that inputs, input services and capital goods were used by the appellant for the construction of a commercial Mall and subsequently the space in the Mall was rented out for commercial purposes. The Commissioner has denied CENVAT Credit to the appellant for the reason that the activity of construction of the building is independent from the activity of renting out the premises and as the inputs, input services and capital goods on which CENVAT Credit has been availed by the appellant had been used for construction of the immovable property on which no service tax was leviable, the appellant would not be entitled to avail CENVAT Credit on such input, input service and capital goods used for the construction of the immovable property. 16. The issue as to whether the CENVAT Credit availed for the construction of a Mall and subsequent renting has been considered time and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice . 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 squarely covered by the decision of the Hon ble High Court of Andhra Pradesh. Since the service tax demand itself is not sustainable, the question of imposition of penalty does not arise. The appeal is allowed with consequential relief to the appellants. 19. At this stage it will also be appropriate to refer to a decision of the Delhi High Court in Vodafone Mobile Services. The High Court examined whether emergence of immovable structure at intermediate stage is a criterion for denial of CENVAT Credit. After referring to the decision of the Andhra Pradesh High Court in Sai Sahmita Storages, the Delhi High Court observed:- 71. Sai Sahmita Storages (P) Limited, is, in our opinion, a decision that held that a plain reading of the definition of Rule 2(k) would demonstrate that all goods used in relation to manufacture of final product or for any other purpose used by a provider of taxable service for providing an output service are eligible for CENVAT Credit. 72. In the present case, it is not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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