CESTAT allows CENVAT credit on inputs and input services utilized as output service [Read Order]

Golf Links Software Park Pvt. Ltd, the appellant is involved in various commercial and industrial construction services, renting of immovable property services etc. On verification of the ST-3 returns filed by the Appellant for the period from 01.04.2009 to 31.03.2010, it is observed that they have availed and utilized the ineligible inputs services. Accordingly, proceedings were initiated and the Adjudication authority as per the impugned order, confirmed the demand of duty and also imposed penalty under various provisions of law.

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When the appeal came up for hearing, the Counsel for the Appellant submits that the issue is no more res integra and in Appellant’s own case for the first period from June, 2007 to March 2009 on very same issue, demand was confirmed and in Appeal, thE Tribunal vide Final Order No. 21081/2018 dated 02.08.2018 allowed the appeal and set aside the order.

Aggrieved by said order, an appeal was filed by the Revenue before the High Court and the High Court of Karnataka dismissed the Department appeal and upheld the finding of the Tribunal that input services like architect service, construction service, management consultancy service, real estate agent service, and erection and commissioning service used for construction of building/premises are admissible input services for taking cenvat credit as against the output service of the appellant.

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Counsel further submitted that the appellant is providing taxable services including renting of immovable property. The Adjudication Authority confirmed the demand without considering the Rule 2(1) of the Cenvat Credit Rules, 2004 prevailing prior to 01.04.2011 where the expression input service both inclusively and exhaustively so as to encompass in rule 2(1) - "any service used by a provider of taxable service for providing an output service, and includes services used in relation to setting up...... the premises of provider of output service or an office relating to such... premises.

The issues involved is denial of cenvat credit on various input services namely, Architects Service, Banking service, Business support Service, Chartered Accountant service, Commercial or industrial construction service, Design service, Insurance service, Management consultant service and Real Estate Agent service., which were used for rendering service under Renting of Immovable Properties, commercial and industrial construction services, etc.

A two member bench of P.A. Augustian, Member (Judicial) and R. BhagyaDevi, Member (Technical) has held that the assessee was entitled to CENVAT credit both on inputs and input services utilized for the construction to be utilized as output service being renting of immovable property.

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