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TMI Blog2019 (4) TMI 1915X X X X Extracts X X X X X X X X Extracts X X X X ..... lication for the period after obtaining the completion certificate. Rule 11(1), (2) and (3) of the Rules applicable to provision for manufactured goods to hold that in case of service becomes exempted at a later stage, there is no such provision in respect of the service. Once the respondent are not required to reverse any credit availed by them on valid input services availed during the period 2010 till obtaining of completion certificate, the said amounts reversed by them under protest cannot be retained by the revenue authorities and have to be refunded to the respondent. Appeal dismissed. - R/Tax Appeal No. 141 of 2019 with Civil Application (For Stay) No. 1 of 2019 - - - Dated:- 12-4-2019 - Harsha Devani and Bhargav D. Karia, JJ. Shri Ankit Shah, for the Appellant. JUDGMENT [Judgment per : Bhargav D. Karia, J. (Oral)]. - Revenue has filed this appeal under Section 35G of the Central Excise Act, 1944 read with Section 174(2) of the Central Goods and Services Tax Act, 2017 raising the following question of law stated to be substantial question of law from Final Order No. 12229-12232/2018, dated 23-10-2018 rendered in Appeal No. ST/11476/2018 passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent reversed under protest towards the proportionate Cenvat credit availed by it during the period 2010-2011 till obtaining completion certificate, at which time output service activity of the respondent was wholly taxable on the ground that after receipt of completion certificate, the property had become immovable property and in case of future sale thereof, no service tax would have been payable and credit in proportion to area which did not attract Service Tax compared to the entire property area. 5. The respondent thereafter, filed a refund claim of ₹ 65,30,867/-, of Cenvat credit reversed, which was paid under protest as no show cause notice was issued by the revenue authorities in this regard. 6. However, subsequently the revenue authorities issued show cause notice demanding 6%/8%/10% amount of sale of immovable property after obtaining completion certificate on the ground that no service tax was paid by the respondent and that it had availed Cenvat credit and provided taxable as well as exempt services i.e. sale of immovable property and it had not maintained separate accounts and the amounts paid under protest for input services received during the period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yet sold by way of sale deed even after obtaining completion certificate, however, where advances were received for such properties prior to the date of obtaining such completion certificate, the Tribunal noted that the respondent availed only proportionate Cenvat credit determined on scientific basis considering square foot area where service tax was paid and balance area where service tax will not be paid after completion certificate, the respondent had not only given due intimation in this regard at the time of obtaining completion certificate but also produced CA certificate to support their case in this regard. The Tribunal therefore, framed the following legal issues : (a) Whether receipt of consideration for residential units sold as immovable property after receipt of completion certificate amounts to providing exempted service and Rule 6 of the CCR, 2004 is applicable in such case and as such, whether the appellants are liable to pay 8%/10% amount of exempted value under Rule 6 of the CCR, 2004? (b) Whether credit can be allowed to the appellants under Rule 3 of the CCR, 2004 in such circumstances? (c) Whether the appellants can be said to have maintain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er perspective it would be necessary to refer to Rule 2(e) of the Rules which defines the term exempted service and reads as under : e. exempted service means a - (1) taxable service which is exempt from the whole of the service tax leviable thereon; or (2) service, on which no service tax is leviable under Section 66B of the Finance Act; or (3) taxable service whose part of value is exempted on the condition that no credit of inputs and input services, used for providing such taxable service, shall be taken; but shall not include a service - (a) which is exported in terms of rule 6A of the Service Tax Rules, 1994 (b) by way of transportation of goods by a vessel from customs station of clearance in India to a place outside India. Upon receipt of completion certificate for the projects, the output activity of sale of residential units becomes non-service as per the provisions of Section 65B(44) of the Finance Act, 1994 which reads as under : 65(44) service means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include - (a) an activity which constitutes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rule 2 shall include an activity, which is not a service as defined in Section 65B(44) of the Finance Act, 1994 provided that such activity has used inputs or input services. However, there was no such stipulation prior to 13-4-2016 in law and prima facie, such situation was not to be treated as exempted service and did not attract the mischief created under Rule 6 of the Rules. Therefore, for the period prior to 13-4-2016, the situation would be governed by Rule 3 of the Rules for availing Cenvat credit till such time i.e. till the time Rule 6 was specifically made applicable by virtue of the deeming fiction created. 14. As per Rule 3 of the Rules, Cenvat credit of service tax paid on input services used to provide output service, is eligible. In the facts of present case, it is evident that the respondent has started taking only proportionate credit after receipt of completion certificate which was after due intimation to the Revenue department and also certified by independent CA. Therefore, Rule 6 of the Rules in toto cannot apply prior to 13-4-2016 to the facts of the case since sale of immovable property is not exempt service at all. Therefore, in the light of the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l output service is sold to the service recipient and the assessee can take the credit immediately after the day on bill/challan of input service is received. In facts of the case, there is no dispute that the respondent availed the credit after receipt of bill/challan in respect of input service and, therefore, it was legally entitled to take the credit on the date after the receipt of service bills/challans. Therefore, the availment of Cenvat credit by the respondent is absolutely legal and correct and in accordance with Rule 4(7) of the Rules. As at the time of taking credit, there was no existence of any exempted service, therefore, there is no application of Rule 6. That part of the service was exempted only after obtaining completion certificate and thereafter, the respondent was not required to avail the Cenvat credit on the input service, if any, received after obtaining the completion certificate. The respondent did not avail the Cenvat credit in respect of the services received after obtaining the completion certificate in respect of exempted service or avail proportionate credit attributed to the taxable output service. Therefore, Rule 6 has application for the period af ..... X X X X Extracts X X X X X X X X Extracts X X X X
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