M/s DLF Cyber City Developers Ltd. Versus Commissioner Central Excise & CGST, Gurugram
Service Tax
2018 (1) TMI 379 – CESTAT CHANDIGARH – TMI
CESTAT CHANDIGARH – AT
Dated:- 3-1-2018
Appeal No. ST/60752/2017 – Final Order No. 60018/2018
Service Tax
Mr. Ashok Jindal, Member ( Judicial )
Shri. P.K. Mittal, Advocate- for the appellant
Shri. G.S.Dhillion, AR- for the respondent
ORDER
Per Ashok Jindal
The appellant is in appeal against the impugned order for denial of cenvat on various input/input services.
2. The brief facts of the case are that the appellant is builder and engaged in the activity of construction of commercial, industrial and residential premises and thereafter these premises were let out by the appellant. The appellant availed the services of construction for these premises prior to 01.04.2011 and availed cenvat credit on the same but utilised during the period 01.04.2011 to 31.03.2012 for payment of service tax under the category of Renting of &
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avail cenvat credit as per Rule 2 (l) of the Cenvat Credit Rules, 2004. Admittedly, all these services have been availed by the appellant for providing output service, therefore, the appellant is entitled to avail cenvat credit on these services. The reason for denial of cenvat credit by the revenue is that as these premises becomes immovable property and looses character of goods, therefore, they are not entitled to avail cenvat credit is not correct as held by the Hon'ble High Court of Madras in the case of Dalmia Cements (Bharat) ltd. C.M.A nos.633-635/2009, wherein, it has been held that any steel items used for fabrication of supports structure which is embedded to earth and used for installation of plant & machinery is entitled for cenvat credit, therefore, the appellant is entitled to avail cenvat credit. He also relied on the decision of the Hon'ble High Court of Andhra Pradesh in the case of Sai Sahmita Storages (P) ltd. reported in 2011 (23) STR 341 (AP) to say that the fact
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that in case of inputs used for construction of a building are not entitled for cenvat credit as per Rule 2 (K) of the Cenvat Credit Rules, 2004.
4. Heard the parties and considered the submissions.
5. I have gone through the records placed before me, I find that the sole reason of denial of cenvat credit in the show cause notice is that the premises which have been let out by the appellant are immovable property, therefore, they are looses the identity of the goods, therefore, any input or services used for construction of this premises are not entitled for cenvat credit. The argument advanced by the ld. AR apart from the allegation made in the show cause notice are not relevant to the facts of this case. Further, I find that all these input/input service in question have been availed by the appellant prior to 01.04.2011 but the same has been utilised for payment of service tax after 01.04.2011. In cenvat credit Rules, 2004, there is no bar of utilisation of cenvat credit availed o
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s and Architectural Professional Services which are utilized for construction of a building to be a hotel. Revenue Authorities are of the view that the service tax credit cannot be availed on these services by the appellants as said property is immovable property. Coming to such a conclusion, two different show cause notices were issued for the demand of the CENVAT credit availed by the appellants along with interest and also for imposition of penalties. One of the allegations in the show cause notices was also that the invoices issued by the service providers were not in the name of appellants the CENVAT credit was availed prior to registration. Both the appellants contested the show cause notice on merits. The adjudicating authority after following due process of law, did not agree with the contentions raised by the appellant and confirmed demands raised along with interest and also imposed equivalent amount of penalty. The adjudicating authority in both the orders decided the issue
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ervices. It is an unimaginable that a hotel can render these services without a building in its place. In our considered view, the input services are availed by the appellant in respect of Works Contract Services, Project Management Services and Architectural Professional Services used for construction of a building, which subsequently is put into use for rendering taxable output services. We find that the adjudicating authority was in error to rely upon the Board Circular No. 98/1/2008-ST dated 04.01.2008 in as much, the definition of input services during the relevant period does not bar availment of CENVAT credit all input services. In order to appreciate correct position of law, the definition of input services under Rule 2(l) of the CENVAT Credit Rules, 2004 as was during the relevant period of these cases is reproduced:
“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 d
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egorically will apply and the clarification given by the Board in CBEC Circular dated 04.01.2008 is going beyond the definition as reproduced is herein above. We find that similar issue as to eligibility to avail the CENVAT credit on design and engineering of pipe line, services rendered by the pipeline laying of contractors, was denied in the case of Reliance Gas Transportation Infrastructure Ltd., (supra), holding that these services were utilized for brining into existence an immovable property. The Bench after considering the definition of input services, held that the provisions of Section 2(l) of the CENVAT Credit Rules, 2004 very clearly indicate eligibility to avail CENVAT credit of the service tax paid on these services.
7. Views of the Tribunal have been fortified by decision of the Honble High Court of Gujarat in the case of Mundra Ports and Special Economic Zone Ltd., (supra) the ratio is in paragraph No. 7, 8 & 9 which we with respect reproduce:
7. It is not disputed t
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n 2 from 2004 up to March, 2006. The Cenvat Credit Rules, 2004 were amended in exercise of the powers conferred by Section 37 of the Central Excise Act, 1944 with effect from 7-7-2009, the date on which it was notified by the Central Government from the date of the notification. According to learned Counsel for the appellant, this amended definition would apply only to the factory or manufacturer and would not apply to the service provider. According to him, either before the amendment made in the year 2009 or thereafter, the appellant was neither factory nor manufacturer and he has only constructed jetty by use of cement and steel for which he was entitled for input credit as jetty was constructed by the contractor, but the jetty is situated within the port area and the appellant is a service provider. According to the appellant, his case is squarely covered by the judgment of the Division Bench of the Andhra Pradesh High Court in Commissioner of Central Excise, Visakhapatnam-II v. Sa
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h the decision of the Larger Bench of the Tribunal. We do not find that amendment made in Cenvat Credit Rules, 2004 which come into force on 7-7-2009 was clarificatory amendment as there is nothing to suggest in the Amending Act that amendment made in Explanation 2 was clarificatory in nature. Wherever the Legislature wants to clarify the provision, it clearly mentions intention in the notification itself and seeks to clarify existing provision. Even, if the new provision is added then it will be new amendment and cannot be treated to be clarification of particular thing or goods and/or input and as such, the amendment could operate only prospectively. In our opinion, the view taken by the Tribunal is based on conjectures and surmises as the Larger Bench of the Tribunal used the expression that intention behind amendment was to clarify. The coverage under the input from where this intention has been gathered by the Tribunal has not been mentioned in the judgment. There is no material t
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d was that the appellant would have provided material to the contractor and labour contract would have been given. The appellant claims that he has provided cement, steel, etc., for which he was entitled for input credit and, therefore, in our opinion, the appellant was entitled for input credit and it cannot be treated that since construction of jetty was exempted, the appellant would not be entitled for input credit. The view taken contrary by the Tribunal deserves to be set aside.
8. It can be seen from the above reproduced paragraphs of the judgment of the Honble High Court of Gujarat the issue avaliment of CENVAT credit on the input services which are used for brining into existence of immovable property are also eligible for availment of CENVAT credit.
9. In view of the foregoing, and the facts and circumstances of this case, we hold that the impugned order is unsustainable and liable to be set aside and we do so. The impugned order is set aside and the appeals are allowed with
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