By TIOL News Service
MUMBAI, APRIL 15, 2013: THE appellant are engaged in rendering the taxable service of ‘renting of immovable property' and they discharge service tax liability. They availed CENVAT credit of various services used for construction of the said mall and utilized the credit for payment of service tax on renting of immovable property services.
The CBEC vide Circular No.96/7/2007-ST dated 23/08/2007 as amended by Circular No 98/1/2007-S.T., dated 04/01/2008 inter alia clarified that Input credit of service tax can be taken only if the output is a 'service' liable to service tax or a 'goods' liable to excise duty; that since immovable property is neither 'service' or 'goods' input credit cannot be taken.
Accordingly, a show cause notice was issued to the appellants proposing to deny CENVAT credit.
The notice was adjudicated by the Commissioner of Service Tax-II, Mumbai and wherein CENVAT credit of Rs. 6,00,63,212/- availed by the appellant was disallowed. Further, credits of Rs. 32,24,111/- and Rs. 15,62,151/- taken by the appellant were also disallowed in respect of input services such as security, telephone, commission, brokerage, advertising, repairs, installation, etc. Interest was also demanded and an equivalent penalty was also imposed along with another penalty u/s 77.
The appellant is before the CESTAT and cites the following decisions in their support -
+ Sai Sahmita Storages (P) Ltd. - (2011-TIOL-863-HC-AP-CX)
+ Navaratna S.G. Highway Property Pvt. Ltd. - (2012-TIOL-1245-CESTAT-AHM)
The Revenue representative reiterated the findings given by the adjudicating authority.
The Bench observed -
“5. We have carefully considered the rival submissions. The hon'ble High Court of Andhra Pradesh and the Ahmedabad bench of this Tribunal in the case of Sai Sahmita Storage (P) Ltd. (supra) and Navratna S.G. Highway Property Pvt. Ltd. (supra) respectively have held that excise duty paid on inputs and service tax paid on input services used in the construction of immovable property can be taken and utilized while discharging service tax liability on the renting of such immovable property. In the light of these decisions, the appellant had made out a strong prima facie case in their favour for grant of unconditional waiver of pre-deposit of the dues adjudged against them. Accordingly, we grant unconditional waiver from the pre-deposit of the dues adjudged against the appellant and stay recovery therefore thereof during the pendency of these appeals.”
(See 2013-TIOL-604-CESTAT-MUM)