By Puloma Dalal, Jayesh Gogri, Chartered Accountants
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Whether CENVAT credit is allowed on service tax paid in respect of renting of immovable property used for displaying finished goods?
Facts:
The appellants were manufacturers of vitrified tiles and availed CENVAT credit of duty paid on inputs, capital goods and input services in accordance with the CENVAT Credit Rules, 2004. The appellants also availed CENVAT of service tax paid of Rs. 1,11,240/- on the rent charged at the premises used for facilitating display of the appellants’ goods. The department disallowed the credit and levied interest and penalties. The Commissioner (Appeals) upheld the order. The appellants contended that, the property taken on rent for the purpose of displaying its vitrified tiles were in line of its business and relied on Bharat Fritz Werner Ltd. 2011 (22) STR 429 (Tri.- Bang) and Micro Labs Ltd. 2012 (26) STR 383 (Kar.) = 2011 (270) ELT 156 (Kar.).
The ld. Respondent contended that, in the present case, the appellants failed to demonstrate that the amount of service tax paid by them was included in the final value of the products manufactured and cleared by them which has to be satisfied by the Appellant.
Held:
It was undisputed that the properties were taken on rent by the appellants for display of vitrified tiles and that the service provider had discharged the service tax under the category of renting of immovable property services. Further, the appellants also produced the chartered accountant’s certificate and thus, the services were utilised by the appellants for the purpose of enhancement of their business. Also, since the services were directly or indirectly used for the purpose of their business, credit could not be denied.
