2018 (12) TMI 1535 – CESTAT CHENNAI – TMI – CENVAT Credit – input services – consulting engineering service – input services received from foreign company – reverse charge mechanism – denial of credit on the ground that it is not input service – Held that:- The appellant has explained that these services were availed in order to start the township project. These were consultancy services availed for preparatory work for developing the township for which they have taken registration for discharging the service tax on these input services under the reverse charge mechanism – During the disputed period, there was no bar for taking the credit on demand of service tax under reverse charge mechanism – The decision laid down in the case of Kansara Modler Ltd. [2014 (1) TMI 1095 – CESTAT NEW DELHI] have categorically held that the assessees are eligible to take credit of the service tax paid under reverse charge mechanism – Credit allowed.
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CENVAT Credit – the appellant has not started p
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, 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 service tax paid by them for the input services received from foreign company for the reason that at the time of availing such services, the appellant had not registered for providing any output service. Show cause notice dated 30.9.2010 was issued for the year April 2009 to March 2010 proposing to recover the irregularly availed credit
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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 disputed period, the appellant in the process of setting up the township project had received various input services like management consultancy, manpower recruitment, renting of immovable property, survey, design, engineering, telecom service etc. These credits were kept in reserve for utilization for future liabilities when the
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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 of Spandana Spoorthy Financial Ltd. Vs. Commissioner of Central Excise, Hyderabad – 2016 (45) STR 265 (Tri. Hyd.) as well as Commissioner of Service Tax, Bangalore Vs. Tavant Technologies India Pvt. Ltd. – 2016 (43) STR 57 (Kar.). 4. The ld. AR Shri A. Cletus supported the findings in the impugned order. He submitted that the input
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t registered for output services of works contract services and therefore not eligible for credit to the tune of ₹ 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 ₹ 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 order to start the township project. These were consultancy services availed for preparatory work for developing the township for which they have taken registration for discharging the service tax on these input services under the reverse charge mechanism. During the disputed period, there was no bar for taking the credit on deman
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e 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 also relying on Rule 5 of Taxation of Services (Provided from Outside India and Received in India) Rules. We find that Rule 5 refers to availing of Cenvat credit and not to utilization of credit. We are therefore of the view that the finding of the Commissioner not treating the appellant as output service provider, is not correct and accordingly we set asi
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ervices 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 Spandana Spoorthy Financial Ltd. (supra). The relevant portion of the decision is as under:- 8. In the event, we hold that the appellant was entitled to avail Cenvat credit on documents evidencing receipt of eligible inputs, capital goods or input services, even before the date they obtained service tax registration. They can very well adjust part or whole o
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