The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Mumbai on April 3rd held that Cenvat Credit is allowable on building constructed for the hotel which is used for renting of services of the hotel.
The Appellant Lemon Tree hotels are engaged in providing of various services of which service tax was only paid in respect of few services, namely, ‘rent-a-cab service’, ‘internet café’, ‘Convention service’, ‘mandap keeper service’, ‘outdoor catering service’, ‘health and fitness service’ and ‘dry cleaning service’.
However, the counsel on behalf of the revenue pleaded that these aforementioned services have no link with the construction service used for non-taxable activity and hence the provision of rule 6(5) of CENVAT credit rules 2004 shall not apply.
The bench consisting of the Technical member, C.J. Mathew, and Judicial Member Ramesh Nair while allowing the appeal observed that, “the appellant has availed CENVAT credit in respect of ‘construction service’ which is used for constructing additional rooms, renovation of the rooms in the hotel.” They further observed that “the construction service received in respect of construction of any part of the hotel is a common input service which has nexus with overall hotel business. Therefore, even though some part of the hotel business is not taxable, but it cannot be said that the construction service was used exclusively for non-taxable services.”To Read the full text of the Order CLICK HERE