62. [2015-TIOL-2705-CESTAT-MUM] M/s Vamona Developers Pvt. Ltd vs. Commissioner of Customs, Central excise and Service Tax, Pune-III

Facts

The Appellant engaged in the construction and sale of commercial properties constructed a mall at Pune for which they received various input services and capital goods during the period June 2007-March 2011. They availed the entire credit on input services in 2011 when the construction was ready for renting out and also took centralised registration in Pune on the said date. The department contended that the input service credit is inadmissible for the construction of a mall resulting in an immovable property which is neither excisable nor any service tax is payable and is used for Renting of Immovable Property Service. Further the credits pertained to the period prior to registration.

Held

The Tribunal held that the entire credit has been availed on input services which have been used for providing the output service of Renting of Immovable Property service for which there is no restriction under clause (l) of the definition of “input service”. The words “setting up” in the definition of input service were deleted only from 01/04/2011. Accordingly, there is no restriction on use of input service for construction of building prior to the said date. Further, relying on the decision of the Karnataka High Court in the case of mPortal India Wireless Solutions Pvt. Ltd [2011-TIOL-928-HC-KAR-ST], it was held that registration is not a condition for availing CENVAT credit. Further, the Tribunal also validated the availing of credit after a period of five years by stating that it is only in 2011 that the Appellant was sure of whether the property would be sold or rented and 20% of the property was sold and therefore they availed credit only when the remaining property was ready for renting out.

Note: Readers may note a similar decision in the case of Maharashtra Cricket Association vs. Commissioner of Central Excise, Pune-III [2015-TIOL-2418-CESTAT-MUM] digest provided in the BCAJ December 2015 issue. Further it should be noted that the proviso to Rule 4(7) of the CENVAT Credit Rules with effect from 01/09/2014 provides that the credit should be taken within a period of 6 months of the issue of the document specified in Rule 9(1) of the said rules. [Extended to one year with effect from 01/03/2015].