M/s. Rakindo Kovai Township Ltd. Versus Commissioner of GST & Central Excise Chennai
Service Tax
2018 (12) TMI 1535 – CESTAT CHENNAI – TMI
CESTAT CHENNAI – AT
Dated:- 20-11-2018
ST/348/2011 And ST/334/2012 – 42918-42919 / 2018
Service Tax
Ms. Sulekha Beevi C.S., Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical)
For the Appellant : Shri K.S. Ravishankar, Advocate
For the Respondent : Shri A. Cletus, Addl. Commissioner (AR)
ORDER
PER BENCH
The appellant is a joint venture company formed in the year 2007 between Rakeen Pvt. Ltd. and Trimex Group Company to develop a township at Coimbatore. As a part of preparatory work for the development of the proposed township, the appellant engaged some of the foreign companies and got themselves registered under the category of Consulting Engineer Service for discharging service tax under reverse charge mechanism. The department was of the view that the appellants are not eligible to take credit of such ser
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rvice / construction of complex service. That the appellant had registered for their output service on works contract service only on 23.10.2009, and the credit availed being prior to this date is not eligible.
Show cause notice was issued proposing to recover the irregularly availed credit along with interest and for imposing penalties. After due process of law, the original authority confirmed the demand, interest and also imposed penalties, against which the appellant has filed Appeal No. ST/348/2011.
3. On behalf of the appellant, ld. counsel Shri K.S. Ravikumar submitted oral as well as detailed written submissions, which can be broadly summarized as under:-
3.1 The appellant is registered under the category of consulting engineer service on 3.1.2008 and was discharging service tax on reverse charge basis for these services availed by them from the foreign company. Later, on 23.10.2009, it got registration certificate amended by including works contract service also. During the
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g up of factory / office premises is eligible to the appellant and therefore it is implied that even if the appellant has not started providing output services, it can avail credit on various input services. All the input services were availed as a precursor for providing the output service and therefore is eligible for credit.
3.2 With regard to the allegation that the service tax is paid under reverse charge mechanism for input services in the nature of consulting engineer service and is not eligible for credit, he relied upon the decision in the case of CST, Bangalore Vs. Arvind Fashions Ltd. – 2012 (25) STR 583 (Kar.) as well as the decision in Kansara Modler Ltd. Vs. Commissioner of Central Excise, Jaipur – 2013 (32) STR 209 (Tri. Del.).
3.3 It is also argued by the ld. counsel that even if the premises is not registered or even before obtaining registration for the output services, the appellant can avail credit. To support this argument, he relied upon the decision in the case
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nting of immovable property, survey, design, engineering, telecom service etc. are output services for the foreign company. Only if these are output services for the foreign company itself, the appellants are eligible for the credit on consulting engineer service.
4.1 With regard to the demand raised alleging that the appellant has not registered for output services of works contract services and therefore not eligible for credit to the tune of Rs. 1,58,89,282/-, he submitted that the input service were availed for construction of the township and therefore they are not eligible for credit.
5. Heard both sides.
6. The short issue that arises for consideration is whether the demand of Rs. 79,26,871/- alleging that the credit availed on consulting engineering service under reverse charge mechanism is eligible or not. The main ground for disallowing the credit is that the said services does not qualify as input services. The appellant has explained that these services were availed in o
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subscriber, policy holder or any other person, as the case may be, and the expressions “provider” and “provided” shall be construed accordingly;
(ii) Rule 2(q) – “person liable for paying service tax” has the meaning as assigned to it in clause (d) of sub-rule (1) of Rule 2 of the Service Tax Rules, 1994;
(iii) Rule 2(r) – “provider of taxable service” include a person liable for paying service tax;
Rule 2(1)(d)(iv) of Service Tax Rules.
(iv) in relation to any taxable service provided or to be provided by any person from a country other than India and received by any person in India under section 66A of the Act, the recipient of such service;
6. If we read Rule 2(q) of Cenvat Credit Rules with Rule 2(1)(d)(iv), we find that appellant is a person liable to Service Tax. Once appellant is person liable to service tax, he becomes provider of taxable service under Rule 2(r) and consequently becomes output service provider under Rule 2(p) of the Cenvat Credit Rules. Revenue is als
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for providing output service of works contract service only with effect from 23.10.2009. The department is of the view that they are eligible to take credit only from the date of registration. Needless to say that the definition of input service prior to 1.4.2011 included services like setting up of factory / office. From this it can be inferred that services which are needed to start providing output service for manufacturing finished products would be eligible for credit. The said issue has been sufficiently analyzed in various cases. The Hon'ble High Court of Karnataka in the case of Tavant Technologies Ltd. (supra) had followed the decision in mPortal Wireless Solutions Pvt. Ltd. – 2012 (27) STR 134 (Kar.) and held that for availing as well as refund of unutilized credit, registration of service tax is not required. There is no rule or statutory provision which makes registration a condition precedent for availing credit. Similar view was taken by the Tribunal in the case of Spand
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