TMI Blog2022 (5) TMI 569X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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. The only question which remains is whether, by virtue of the fact that the building which emerges is neither a good nor a service, the appellant can be denied CENVAT credit. The jurisdictional Delhi High Court in VODAFONE MOBILE SERVICES LIMITED, INDUS TOWERS LIMITED, TOWER VISION INDIA PRIVATE LIMITED, BHARTI INFRATEL LIMITED, VERSUS COMMISSIONER OF SERVICE TAX, DELHI [ 2018 (11) TMI 713 - DELHI HIGH COURT] has held in favour of the appellant. The appellants are entitled to the disputed CENVAT credit. Consequently, the impugned orders seeking to deny and recover CENVAT credit along with interest and seeking to the impose penalties cannot be sustained - Appeal allowed - decided in favor of appellant. - ST/52469, 52612/2016 - Final Order Nos. 50400-50401 /2022 - Dated:- 9-5-2022 - MR. DILIP GUPTA, PRESIDENT AND MR. P.V. SUBBA RAO, MEMBER (TECHNICAL) Shri B L Narasimhan and Ms. Priyamvada Joshi, Advocates for the appellant Shri Harsh Vardhan and Shri Radhe Tallo, Authorised Representative for the Respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 . 4. 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. 5. 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. 6. The appeals are filed by the appellants on the following grounds: (i) The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able service. Reliance was placed on the following case law: (a) Mundra Ports Special Economic Zone Limited v. Commissioner of Central Excise Customs, [2015 (39) STR 726 (Guj)]. (b) Commissioner of Central Excise, Visakhapatnam-II vs. Sai Samhita Storages (P) Limited, [2011 (23) STR 341 (AP)] (c) Vandana Global Limited vs. Commissioner of Central Excise and Customs [2017-TIOL-2853-HC V. CHHATTISGARH-CX], affirmed by the Hon'ble Supreme Court [2018 TIOL-262-SC-CX-LB] (d) Dymos India Automotive Pvt. Ltd. vs. Commissioner of Central Excise, Chennai IV [2018-TIOL-1116-CESTAT-MAD] upheld by Hon'ble Madras High Court [2018-TIOL-1947-HC-MAD-ST] (e) Vodafone Mobile Services Ltd. vs. Commissioner of Service Tax, Delhi, [2018-TIOL-2409-HC-DEL-ST] affirmed by Hon'ble Supreme Court [2019-TIOL-309-SC-ST] (f) Bharti Hexacom Ltd. vs. Commissioner of Central Excise Customs, CGST, Jaipur, [2021-TIOL-305-CESTAT-DEL] (g) Kellogg India Pvt. Ltd. vs. Commissioner of Central Tax, Tirupathi, [2020-TIOL-1040-CESTAT-HYD] (h) Pepsico India Holdings Pvt. Ltd. vs. Commissioner of Central Tax, Tirupati, [2021-TIOL-448-CESTAT-HYD] (i) GMR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld by the Bombay High Court in Bharti Airtel Limited vs. Commissioner of Central Excise, Pune [ 2014 (35) STR 865 (Bom.) ] following the judgment of the Bombay High Court in Vodafone India Limited vs. Commissioner of Central Excise, Mumbai-II [ 2015 (40) STR 422 (Bom) ]. The assessee appealed against the judgment of Bombay High Court judgments and Civil Appeal No. 10409- 10410/2014 are pending before the Supreme Court. (iii) The Larger Bench of the CESTAT has in Tower Vision vs. Commissioner of Central Excise, (Adj), Delhi [ 2016 (42) STR 249 (Tri.-LB) ] held that MS angles and Channels, etc used for erection of Mobile towers are not eligible for CENVAT credit, which decision was reversed by the Delhi High Court in Vodafone Mobile Services Limited vs. Commissioner of Service Tax, Delhi [ 2019 (27) GSTL 481(Del.) ]. Civil Appeal No. 5037 of 2021 and 5038 of 2021 filed by the Revenue against the Delhi High Court judgment is pending. A summary of the various cases is pending before the Supreme Court is as follow: Name of the assessee High Court Appeal no. before Supreme Court Status Remarks ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into existence and the structure will come into existence only with the help of inputs, capital goods and input services. The mere fact that the structure is attached to the earth does not dilute the fact that it is being used for providing a taxable service. 12. We find that this issue was addressed by various High Courts. In Commissioner of Central Excise, Visakhapatnam vs. Sai Samhita Pvt Ltd. [ 2011 (23) STR 341 (AP) ], the High Court of Andhra Pradesh has decided that CENVAT credit is admissible on cement and TMT bars for construction of warehouses by M/s Sai Samhita who were providing storage and warehousing services. The relevant portion of this judgment is reproduced below: The only allegation against the assessee is that they claimed CENVAT credit irregularly with reference to cement and TMT bars used in the construction of warehouses through which the storage and warehousing services are provided by the assessee. Section 65(102) of the Finance Act defines storage and warehousing as to include storage and warehousing services for goods including liquids and gases but does not include any service provided for storage of agricultural produce or in service provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rol, 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. 7. A plain reading of both the above definitions would show that, unless excluded, all goods used in relation to manufacture of final product or for any other purpose used by a provider of taxable service for providing an output service are eligible for CENVAT credit. In Maruti Suzuki Ltd. v. Commissioner of Central Excise, Delhi-III, (2009) 9 SCC 193 = 2009 (240) E.L.T. 641 (S.C.) the Supreme Court laid down as follows. 9. Coming to the statutory definition of the word input in Rule 2(g) in the CENVAT Credit Rules, 2002, it may be noted that the said definition of the word input can be divided into three parts, namely: (i) specific part (ii) inclusive part (iii) place of use 10. Coming to the specific part, one finds that the word input is defined to mean all goods, except light diesel oil, high speed diesel oil and petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15(2) of the Rules is concerned, unless and until there is a finding that there was suppression of fact, and irregular claim of CENVAT credit, the question of levying penalty under Rule 15(2) of the Rules docs not arise. In that view of the matter, the order levying penalty was rightly set aside by the CESTAT. 10. These two appeals, for the above reasons, are, accordingly, dismissed. No costs. 13. The judgment of the Andhra Pradesh High Court in Sai Samhita was referred to by the Gujarat High Court in Mudra Port and CENVAT credit was allowed on the inputs used for construction of jetty. 14. In Vandana Global Limited, the High Court of Chhattisgarh disposed of the bunch of appeals reversing the order of the Larger Bench of this Tribunal. The question framed by the Chhattisgarh High Court were as follows: 4. In the light of the contents of the impugned order of the Tribunal and submissions of the Assessee and the Revenue following substantial questions of law are formulated for consideration: (A) Whether the terms capital goods excluded the structures embedded in earth? (B) Whether the goods like angles, joists, beams, bars, plates, which go into fabricati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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