By Puloma Dalal, Jayesh Gogri, Mandar Telang; Chartered Accountants
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Renting of Property not possible unless it comes into existence – input credit of Service tax on services used during construction Available against renting services.
Facts
Appellant availed CENVAT credit of service tax paid on input services, goods used in construction services against their service tax liability under the category of Renting of Immovable Property Service. Relying on Circular No. 96/7/2007-ST amended by Circular No. 98/1/2008-ST the department contended that such credit is ineligible and a show cause notice was issued. The adjudicating authority confirmed the demands and therefore the present appeal is filed.
Held
The Tribunal noted that due service tax is discharged under the category of “Renting of Immovable Property Service”. Such service tax payment is not possible unless the immovable property comes into existence. Thus without its construction the same cannot be rented out. Relying on the decision of the Andhra Pradesh High Court in the case Sai Samhita Storages [2011-TIOL-863- HC-AP-CX] and the decision in the case of Navaratna S.G. Highway [2012-TIOL-1245-CESTAT -AHM] the credit was allowed.
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] refer digest in the BCAJ December 2015 issue and Vamona Developers P. Ltd [2015-TIOL-2705-CESTAT -MUM] refer digest in the BCAJ January 2016 issue. Further w.e.f. 01.04.2011 only services used in respect of modernization, renovation, repairs of premises from where service is provided are admissible for CENVAT credit and ‘setting’ up of the premises has been omitted.
