Cenvat Credit allowable on Input Services for providing Works Contract Service: CESTAT quashes Service Tax Demand [Read Order]

The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashes service tax demand and observed that cenvat credit is allowable on input services for providing works contract service.

The appellant, M/s B.L. Kashyap & Sons Ltd. are engaged in providing industrial complex construction service and residential complex construction service, maintenance or repair service, goods transport operation operators and works contract serviceexigible to service tax.

On scrutiny of the ST-3 returns submitted by the appellant, it appeared to the Department that the appellant was providing taxable as well as exempted services and that they have not maintained separate records showing the credit utilized in exempted as well as dutiable services in contravention of Rule 6 (3) of Cenvat Credit Rules, 2004.

R.P. Jindal, counsel, appearing for the appellant submitted that in respect of works contract services they have opted for payment of service tax under composition scheme and under the scheme the appellant is eligible to take cenvat credit on input services and capital goods.

The appellant submitted that the condition of non-availment of Cenvat credit has been fulfilled in respect of Construction Services and only in respect of Works Contract Service, where there is no express bar on the availment of Cenvat credit on input services, they have availed such credit

Rajeev Kapoor, Authorized Representative appearing for the Department reiterated the findings of the adjudicating authority.

The Two-Judge Bench of the Tribunal comprising Justice Dilip Gupta, President and P Anjani Kumar, Technical Member observed that “We find that it is incorrect on the part of the Adjudicating authority to came to a conclusion that the appellant availed Cenvat credit on the basis of ST-3 returns which shows income under exempted services. It is not the case of the appellant that he has not provided any exempted services.”

To Read the full text of the Order CLICK HERE

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