CX - CICS utilised for establishment of plant is not an Input service: CESTAT
By TIOL News Service
MUMBAI, JAN 20, 2017: APPELLANT, a '100% EOU' issued with Letter of Permission (LoP) under the Foreign Trade Policy, disputes the disallowance of CENVAT credit of Rs.11,11,288/- on 'commercial and industrial construction service' availed.
It is an admitted fact that the service was utilised for establishment of 'active pharmaceutical ingredient' (API) plant which, appellant claims, is used in relation to manufacture and, hence, eligible.
As the disallowance of credit by the original authority was upheld by the Commissioner(A), the appellant is before the CESTAT and places reliance on the decision in Ultratech Cement Ltd - 2010-TIOL-745-HC-MUM-ST to counter the reliance placed in the impugned order on the decision in re Manikgarh Cement - 2010-TIOL-720-HC-MUM-ST.
The Bench inter alia observed -
+ an 'input service' is one that finds use in manufacture of 'output'. A factory is essential for manufacture of an output and it would, at first glance, appear that claim of appellant is tenable.
+ tax laws do not discriminate and cannot, within reason, allow a discriminatory treatment that permits a tax arbitrage merely because a particular business model is adopted. If we were to compare a situation wherein the hirer of a factory premises were at a disadvantage vis-à-vis an owner of factory premises, this windfall would become obvious.
+ for this reason alone, the superficial conformity with definition of 'input service' is anathema. The argument advanced on behalf of appellant is not tenable.
Holding that the appeal is bereft of merit, the same was dismissed.
(See 2017-TIOL-179-CESTAT-MUM)