TMI Blog2019 (7) TMI 908X X X X Extracts X X X X X X X X Extracts X X X X ..... riod prior to 13.4.2016, the situation would be governed by rule 3 of the Rules for availing Cenvat Credit till such time i.e. till the time rule 6 was specifically made applicable by virtue of the deeming fiction created. As per rule 3 of the Rules, Cenvat credit of service tax paid on input services used to provide output service, is eligible. In the facts of present case, it is evident that the respondent has started taking only proportionate credit after receipt of completion certificate which was after due intimation to the revenue department and also certified by independent CA. Therefore, rule 6 of the Rules in toto cannot apply prior to 13.4.2016 to the facts of the case since sale of immovable property is not exempt service at all. Thus, in the light of the provisions of Rule 3 of the Rules, respondent cannot avail full Cenvat credit on input services received after obtaining completion certificate. Hence, the respondent cannot be expected to pay an amount equal to 8%/10% of sale price of immovable property after obtaining such completion certificate where no service tax is paid as if it is sale of immovable property since Rule 6 of the Rules perse does not apply to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6(2) of Cenvat Credit Rules, 2004 regarding maintenance of separate records for providing taxable service and exempted service, and the procedures to be followed under the provisions of Rule 6(3) of the CCR, 2004 when failed to maintain separate records for taxable and exempted services and also not taken into cognizance the Rule 2(1) of Cenvat Credit Rules 2004 pertains to input service . 2. The respondent was engaged in providing taxable services within the meaning of the Finance Act, 1994 including construction of residential complex, commercial or industrial complex, special services provided by builders, renting of immovable property, maintenance and repair services, business support services, etc. The respondent was registered with Service tax department and also availing the facility of Cenvat credit as per Cenvat Credit Rules, 2004 ( the Rules for short). 3. The respondent had paid service tax under works contract service category for the residential units sold to various customers from time to time. On 24.7.2014, the residential project of the respondent was awarded completion certificate and as on date of obtaining such completion certif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such credit was correctly reversed and was not required to be refunded. 7. The respondent therefore, being aggrieved by the order passed raising the demand under rule 6 of the Rules as well as rejection of the refund claim by the revenue authorities preferred appeal before the Customs, Excise Service Tax Appellate Tribunal, West Zone, Ahmedabad (hereinafter referred to as the Tribunal ). The Tribunal allowed the appeal of the respondent. 8. Learned Advocate for the appellant submitted that the Tribunal has committed an error in holding that the respondent was justified in availing only proportionate Cenvat Credit considering square foot area where service tax was paid and balance area where service tax will not be paid after completion certificate contrary to Rule 6(2) and 6(3) of the Rules. It was submitted that after holding that after receiving completion certificate the output activity was nonservice as per provisions of section 65B of the Finance Act,1994 read with definition of term exempted service under Rule 2(e) of the Rules, the Tribunal has erred in allowing the availment of Cenvat Credit to the respondent on proportionate basis. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntire property, and portion of such property did not attract Service Tax after receipt of Completion Certificate? e. Connected to the question (d), whether the Appellants are eligible to seek refund of the amount paid under protest towards Credit availed from 2010 till receipt of completion certificate, based on CERA audit objection wherein such credit was sought to be reversed based on considering square foot area where Service Tax was paid and balance area where Service Tax will not be paid after Completion Certificate. 10. The Tribunal after considering the facts of the case and relevant provisions of the Act arrived at following conclusion: a. For the above reasons, the Appellants are not liable to pay 8%/10% amount of value of service became exempted after receipt of completion certificate under Rule 6 of the CCR. b. The Cenvat Credit on input services received after obtaining Completion Certificate cannot be wholly allowed to the Appellant, and since they had availed only proportionate credit by maintaining separate accounts, the same is therefore sufficient compliance of the legal obligation cast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merely- ( i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or ( ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of article 366 of the Constitution; or ( iii) a transaction in money or actionable claim 12. For the purpose of invoking provisions of Rule 6 of the Rules in facts of the present case, the output service must first be exempt from service. 6. [(l) The CENVAT credit shall not be allowed on such quantity of input as is used in or in relation to the manufacture of exempted goods or for provision of exempted services or input service as is used in or in relation to the manufacture of exempted goods and their clearance upto the place of removal or for provision of exempted services and the credit not allowed shall be calculated and paid by the manufacturer or the provider of output service, in terms of the provisions of subrule (2) or subrule (3), as the case may be : Provided that the CENVAT credit on inputs shall not be deni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pendent CA. Therefore, rule 6 of the Rules in toto cannot apply prior to 13.4.2016 to the facts of the case since sale of immovable property is not exempt service at all. Therefore, in the light of the provisions of Rule 3 of the Rules, respondent cannot avail full Cenvat credit on input services received after obtaining completion certificate. Hence, the respondent cannot be expected to pay an amount equal to 8%/10% of sale price of immovable property after obtaining such completion certificate where no service tax is paid as if it is sale of immovable property since Rule 6 of the Rules perse does not apply to the present case until 13.4.2016 at all. 15. Even after 13.4.2016, since the respondent had availed only proportionate credit, the respondent was not legally required to pay 8%/10% amount under rule 6(3) of the Rules, since it can be said to have maintained separate accounts as required under rule 6(2) of the Rules. As respondent has taken only proportionate credit on input services after receipt of completion certificate, duly backed by CA certificate and certified work sheets for the proportionate credits availed after completion certificate, it has fulfill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the services received after obtaining the completion certificate in respect of exempted service or avail proportionate credit attributed to the taxable output service. Therefore, Rule 6 has application for the period after obtaining the completion certificate. Rule 11(1)(2) and (3) of the Rules applicable to provision for manufactured goods to hold that in case of service becomes exempted at a later stage, there is no such provision in respect of the service. The only provision for the service is provided under subRule (4) of Rule 11 of the Rules which reads as under : 11(4). A person provider of output service shall be required to pay an amount equivalent to the CENVAT credit, if any, taken by him in respect of inputs received for providing the said service and is lying in stock or is contained in the taxable service pending to be provided, when he opts for exemption from payment of whole of the service tax leviable on such taxable service under a notification issued under Section 93 of the Finance Act, 1994(32 of 1994) and after directing the said amount from the balance of CENVAT credit, if any, lying in his credit, the balance, if any, stil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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