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2016 (12) TMI 484 - CESTAT MUMBAIDenial of CENVAT credit on various inputs services which are consumed for construction of the building - demanf of tax on interest-free deposit, forfeited amounts - renting of immovable property services - Held that: - As regards the denial of CENVAT credit of input and inputs services used in relation to the building of the property which was to be used by the appellant for the commercial purpose by leased out the area of such commercial property, we find that there is no dispute that the appellant had discharged the Service Tax liability on the amount received as rent from their clients. If appellant is discharging Service Tax liability on the output services under the category of renting of immovable property , we do not find any reason for denial of CENVAT credit on various input and inputs services used in relation to building of such commercial property. As regards the demand of Service Tax liability on the interest-free security deposit, we find that the adjudicating authority has calculated notional interest payable on such interest-free security deposit and related the notional interest as received in relation to renting of immovable property services. We are not in agreement with such finding of the adjudicating authority, for the reason that an agreement between the appellant and his customer provides for interest free security deposit, which is nothing but advance, Revenue cannot state that such security deposit will earn interest, and notional interest needs to be taxed. As regards Service Tax liability on the amount which was forfeited by the appellant as liquidated damages for rendition of the customer in not taking the possession of the premises contracted for, we do agree that Service Tax liability on such amount forfeited as liquidated damages does not arises. As regards the CENVAT credit improperly availed on amount of ₹ 3.30 crores (approx), we find that the issue needs reconsideration by the adjudicating authority as various documents produced before us as also before the adjudicating authority, in our opinion were not considered in proper prospective and no findings are given; without expressing any opinion on the merits of this issue, we set aside the finding of the adjudicating authority on this point and remit this point for redetermination by the adjudicating authority after following the principle of natural of justice. Appeal partly allowed - matter on remand.
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