Architect Service, Telephone Expenses for Hotel Construction are Input Services: CESTAT allows Cenvat Credit [Read Order]

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), allowed cenvat credit on service tax and observed that architect service, telephone expenses for hotel construction are Input Services.

The appellant, M/s Asrani Inns & Resorts Pvt Ltd, provides taxable services and is registered in Mumbai. They have constructed two hotels one in Delhi and another in Hyderabad. The appellants availed CENVAT Credit of Service Tax paid on Architect Service, telephone expenses, security services, legal and professional service, structural consultancy etc and undisputedly the said services were utilized for construction of hotels in Hyderabad and Delhi.

The issue is whether after amendment to definition of input service under Rule 2(l) of CENVAT Credit Rules, 2004, with effect from 01.04.2011, the said CENVAT Credit was admissible to the appellant or not specifically after the words “setting up” has been deleted from the definition.

The lower authorities have held that the construction of hotel premises at Hyderabad and Delhi was setting up and therefore denied CENVAT Credit part. The Authorized Representative also subscribed to the same view.

The Advocate for the appellant relied on the decision of coordinate Bench of the Tribunal in the case of Lemon Tree Hotel vs Commissioner of Central Excise Hyderabad, wherein it was held that “It is unimaginable that the hotel can render these services without a building in its place. In our considered view the input services are availed by the appellant in the works contract services, project management services and structural professional services used for construction of a building which subsequently is to be used for rendering the taxable output services.”

The Tribunal of Anil G. Shakkarwar, Member (Technical) observed that “In the present case activity was that of construction and therefore the services stated such as architect service, telephone expenses etc. were input services and therefore the Service Tax paid on the said services is eligible as CENVAT Credit to the appellant.”

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates