CA Pratibha Goyal | May 16, 2022 |
Credit of inputs used for construction of Immovable Property used for providing rental services allowed: CESTAT
The appellants have constructed buildings which they rented for commercial purposes and paid service tax under the head of “renting of immovable property Service”. The appellants had taken CENVAT credit of service tax paid on “input services” and excise duty paid on inputs and capital goods used for construction of the buildings and utilised the same for payment of service tax on “renting of immovable property service”.
Show cause notices were issued to the appellants seeking to deny and recover the CENVAT credit so availed on the ground that the inputs, input services and capital goods resulted in creation of immovable property which is neither goods nor services as clarified by the CBEC Circular No. 98/1/2008-ST dated 04.01.2008 and CBEC Instruction No. 267/11/2010-CX dated 08.07.2010 and, therefore, no CENVAT credit is available.
The impugned order denies CENVAT credit on this ground and has ordered its recovery from the appellants. In the case of Bharti, a penalty equal to service tax was also imposed under Rule 15 of CENVAT Credit Rules, 2004 read with Section 78 of the Finance Act, 1994 and a penalty of Rs. 10,000/- was imposed under Section 77 of the Finance Act, 1994.
Aggrieved by the same, the appellants are in appeal with CESTAT.
The short question to be answered is whether inputs, capital goods and input services which are used for construction of buildings and structures, which are then used for providing services are eligible for CENVAT credit or not.
17. We also find substance in the submission of the appellants on merits as it is undisputed that the appellants are engaged in providing renting of immovable property service and all the inputs, capital goods and input services which are in dispute were used for construction of buildings which were then rented out and service tax was paid on the renting of immovable property service.
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