TMI Blog2019 (5) TMI 372X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri V. Sridharan, Advocate with Shri Vinay Jain, C.A. for Appellant Shri M.K. Sarangi, Jt. Commissioner (AR) for Respondent ORDER Per: Dr. D.M. Misra This is an appeal filed against Order-in-Original No. PUN-EXCUS- 003-COM-029-13-14 dated 29.11.2013 passed by the Commissioner of Central Excise Service Tax, Pune. 2. Briefly stated the facts of the case are that the appellants have been providing taxable service under the category of Renting of Immovable Property Service' during the relevant period October, 2007 to March, 2012. The appellant had availed inadmissible total CENVAT Credit of ₹ 9,40,38,326/- on capital goods and input services during the said period. Consequently, a show-cause notice was issued to them on 16.4.2013 invoking extended period of limitation for recovery of the said credit with interest and penalty. On adjudication, the demand was confirmed with interest and penalty. Hence, the present appeal. 3. The learned Advocate for the appellant has submitted that during the period in dispute the appellant had constructed a mall, which was let out s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f input service. Further, he has submitted that the activities relating to setting up of premises of provider of output service also falls within the ambit of input service. It is their contention that definition of input service specifically refers to the activities in relation to setting up of premises of provider of output service within its scope and ambit. In the present case, construction of mall has been completed in January, 2008 and there is no doubt to the fact that the input service namely, Architect Services, Works Contract Service and other services were used in the construction of the mall, which in turn, has been rented out and Service Tax on such renting activity has been discharged by the appellant. It is their contention that without utilizing such services, mall could not have been constructed and therefore, the renting of immovable property would not have been possible. 5. He has further submitted that the issue is no more res integra and covered by the decision of this Tribunal in the case of Navaratna S.G. Highway Prop. Pvt. Ltd. 2012 (28) STR 166 (Tri- Ahd.), Vamona Developers Pvt. Ltd. 2016 (42) STR 277 (Tri-Mum), Oberoi Mall Ltd. 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ument that for claiming CENVAT Credit by a service provider, for deciding the eligibility on the inclusive part of the definition under Rule 2(l), the later part also needs to be satisfied. In other words, the service provider claiming credit even though covered under the inclusive part of the definition also has to be established that the service is used for providing the output service and the nexus should be direct one. 8. Further, he has submitted that the immovable property is neither subjected to Service Tax nor excise duty. Hence, credit of input services availed for construction of immovable property is inadmissible. In support, he has referred to the Circular dated 4.1.2008. Further, referring to the judgment of this Tribunal in City Centre Mall Nashik Pvt. Ltd. (supra), the learned AR has submitted that in para 4 of the said judgment, it is observed that since the inputs were used for providing construction service, which is not an output service of the appellant, therefore CENVAT Credit was not admissible. Further, referring to the judgment in the case of Tower Vision India Pvt. Ltd. Vs. Commissioner of Central Excise, Delhi 2016 (42) STR 249 (LB) t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder output service of Renting of Immovable property after 01.06.2007 1,46,55,551/- Total 9,40,38,326/- 12. The contention of the appellant is that the construction of mall they have used capital goods and input services. It is their contention that capital goods that were installed in the said mall are Air Conditioning system, escalators, Transformers, DG sets, electrical and accessories falling under Chapters 82, 84, 85 and 90 of the Central Excise Tariff Act, 1985, accordingly, satisfy the definition of capital goods and eligible to credit. Further, they have argued that the mall is an immovable property which comes at the intermediate stage and ultimately used in providing taxable output services. Therefore, contention of the Revenue that the said immovable property had not suffered excise duty nor Service Tax, is immaterial and in no manner would affect the admissibility of CENVAT Credit on input services used in construction of mall, which is ultimately given on rent to customers and service tax has been paid on Renting of Immovable Property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etion of construction of shopping mall during April 2007 to March 2011 and after construction of shopping mall i.e. from April 2009 to March 2011 ₹ 55,01,660/-. 15. Analyzing the judgments cited by both sides including Navratna SG Highway Prop. Ltd. (supra), Sai Samhita Storage Pvt. Ltd. (supra), Mundra Port and SEZ Ltd. (supra) and other cases it is observed at para 5 7 as follows: - 5. We have carefully considered the submissions made by both the sides. The issue involved in the present case to be decided is the admissibility of the cenvat credit on various input, input services and capital goods. As regard cenvat credit of ₹ 1,63,67,075/- on the goods namely steel cement, doors, windows etc. used for construction of shopping mall, these goods were inputs for the service namely construction of shopping mall, however the same goods is not the input for providing output service i.e. renting of immovable property. Therefore in view of Honble High Court of Bombay judgement in the case of Bharti Airtel Ltd. (Supra), the cenvat credit is not admissible on the goods used in the construction of mall. As per the definition of input for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... input service means any service,- (i) used by a provider of taxable service for providing an output service; or (ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal; From the above definition it can be seen that the services used for setting up the premises of output service provider is admissible input service. In the present case the appellant are output service provider and got the shopping mall set up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gst others services used in relation to setting up, premises of provider of output service or an office relating to such premises. On the analysis of the definition, it becomes clear that the 'input service' is not limited to the services for providing output service, but it also includes the service for setting up the premises of provider of output service. In the present case the input services are Architect Services, Consulting Engineers Services, Management Consultancy Services etc. used for setting up the premises i.e. stadium of provider of output service i.e. the appellant. The output service is renting of stadium and other miscellaneous services. In view of this undisputed position of law, the services, used by the appellant for setting up the stadium, are input services and squarely covered by definition of 'input service' as reproduced above. The Board Circular appears to have travelled absolutely contrary to the clear and plain language of the definition of the input service. It is very pertinent that legislators knowing fully that there is no tax or excise duty on the constructing premises of the output service provider, included services used for settin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing on the aforesaid judgment, this Tribunal in the case of Laxmi Enterprise and Varun Industries taken the consistent view and allowed the Cenvat Credit in respect of input services used for construction of godown/other immovable properties which were used for renting services. In another case of Sai Samhita Storages Pvt. Ltd., passed by Tribunal's Bangalore bench which was upheld by the Hon'ble High Court of Andhra Pradesh, the fact was that cement and TMT bars were claimed as inputs for construction of warehouse which was used for providing 'storage and warehouse services'. The Hon'ble High Court held that without use of cement TMT bars 'storage and warehouse services' could not have been provided, accordingly Cenvat Credit was allowed on cement and TMT bars. In view of the above findings, not only by this Tribunal but also endorsed by the Hon'ble High Court of Andhra Pradesh that the Cenvat Credit on inputs and input services are admissible for construction, which is used for providing output services. We are also of the considered view that in the present case the appellant has clearly entitled for Cenvat Credit in respect of all the services u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Vamona Developers Pvt Ltd. by referring to the judgment of Hon'ble High Court of Karnataka in the case of M. Portal India Wireless Solutions Pvt. Ltd. -2012 (27) STR 134 (Kar) - 2011-TIOL-928-HC-KAR- ST and the judgment of Hon'ble High Court of Andhra Pradesh in the case of SaiSamhita Storages Pvt. Ltd. -2011 (270) ELT 33 (A.P.) - 2010-TIOL-1751-CESTAT-BANG and held in the favour of the appellant. We do not find any reason to deviate from such a view already taken on this issue. 8. As regard the judgment relied upon by the departmental representative in the case of Galaxy Mercantile Ltd. (supra), we find that Hon'ble High Court of Allahabad has only affirmed a prima-facie view on predeposit of amount. The view expressed by the Hon'ble High Court is only prima-facie view. In the case of NavratnaS.G. Highway Properties (P) Ltd (supra) and various judgments, the Tribunal has taken the final view while disposing the appeals. 9. In view of the foregoing, we find that the impugned orders are liable to set aside and the appeals are allowed with consequential relief, if any. (iii) Vamona Developers Pvt. Ltd. (supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provider of output service etc. The words setting up were deleted only from 1.4.2011. Therefore the appellant are eligible for the credit in terms of the definition of input service. In view of the above decisions which were given after detailed interpretation of definition of input service, the services used for construction of shopping mall are admissible for cenvat credit. We therefore set aside the demand of ₹ 1,01,76,663/-. As regard the demand of cenvat credit amounting to ₹ 55,01,660/-, the cenvat credit was availed on the services such as advertisement, broadcasting, C.A., cleaning service, insurance service, management maintenance and repair service etc., the same was denied on the allegation in the show cause notice that these services have no nexus to the output service of renting of immovable property. In this regards we observed that the service used whether prior to construction or after completion of the construction, the cenvat credit is admissible for the reason that the services used prior to the construction is in relation to the construction of service which is admissible input service as discussion in the above paragraphs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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