Custom, Excise & Service Tax Tribunal
Maharashtra Cricket Association vs Commissioner Of Central Excise, ... on 8 October, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II Appeal No. ST/83/12-Mum [Arising out of Order-in-Original No. 25/P-III/ST/COMMR/2011-12 dtd. 30/11/2011 passed by the Commissioner of Central Excise, Pune-III] For approval and signature: Honble Mr. P.S. Pruthi, Member (Technical) Honble Mr. Ramesh Nair, Member (Judicial) =======================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : seen
of the Order?
4. Whether Order is to be circulated to the Departmental: Yes
authorities?
=======================================================
Maharashtra Cricket Association
:
Appellant
VS
Commissioner of Central Excise, Pune-III
:
Respondent
Appearance
Ms. Aparna Hirandagi, Advocate for the Appellant
Shri A.K. Goswami, A.C, (AR) for the Respondent
CORAM:
Honble Mr. P.S. Pruthi, Member (Technical)
Honble Mr. Ramesh Nair, Member (Judicial)
Date of hearing: 8/10/2015
Date of decision: / /2015
ORDER NO.
Per : Ramesh Nair
This appeal is directed against Order-in-Original No. 25/P-III/ST/COMMR/2011-12 dtd. 30/11/2011 passed by the Commissioner of Central Excise, Pune-III, wherein the Ld. Commissioner confirmed the demand for Rs. 2,32,27,682/- under Sec. 73 of the Finance Act and the same amount already paid by the appellant was appropriated against the said liability. Interest under Sec. 75 was also demanded and the amount of Rs. 1,50,000/- paid by the appellant was adjusted against the interest liability.
2. The fact of the case is that M/s. Maharashtra Cricket Association is an association established with the purpose of the game of cricket. They are registered with the Service Tax Department as recipient of various taxable services and also provider of services of Renting of Immovable Property Services. The appellant constructed a cricket stadium at vill. Gahunje, Tal. Mulshi, Distt. Pune and for the said purpose, they had received architects services and design services from certain consultants, who did not have any office or fixed established in India; that, as such M/s. Maharashtra Cricket Association had paid service tax on the services received by them from persons located outside India in terms of Sec. 66A of Finance Act; after paying the service tax on reverse charge basis M/s. M.C.A. had taken Cenvat Credit on the amount of such service tax paid by them. A show cause notice was issued to the appellant wherein it was contented that as per the relevant provisions under the Cenvat Credit Rules, 2004 and as clarified by the Central Board of Excise & Customs, New Delhi, vide Circular No. 98/01/2008-ST dated 04.01.2008, the credit of service tax paid on commercial or industrial construction service or works contract service, used for construction of immovable property, is not eligible as input service credit to person providing Renting of Immovable Property Services and therefore the amount of service tax paid on architects services and design services received by the appellant which they had used for constructing the said stadium, was inadmissible to appellant and thus liable to be recovered.
3. In view of this contention, the show cause notice proposed the demand of Cenvat Credit amount of Rs. 2,32,27,682/- in terms of Rule 14 of Cenvat Credit Rules, 2004 read with Sec. 73 & Sec. 75 of the said Act and also proposed appropriation of equal amount, which was already paid by the appellant against the aforesaid liability. In addition, interest under Sec. 75 and penalty under Sec. 78 were also proposed to be imposed/demanded. In the adjudication, the Ld. Commissioner confirmed the demand as proposed in the show cause notice and also demanded the interest, however no penalty was imposed. Aggrieved by the impugned order, the appellant filed the present appeal.
4. Ms. Aparna Hirandagi, Ld. Counsel for the appellant submits that the show cause notice as well as confirmation of the demand was made only on the basis of Board Circular No. 98/01/2008-ST dated 04.01.2008. She submits that the said Board Circular is completely contrary to the definition of Input Services provided under Rule 2(l) of Cenvat Credit Rules, 2004. She further submits that period involved in the present case is 2008-09. As per the definition of input service, prevailing at the relevant time as provided under Rule 2(l) of Cenvat Credit Rules, 2004, services use in relation to setting up the premises of provider of output service is specifically included in the definition of input service. In the present case, Cenvat Credit availed in respect of services such as Architect Services, Consulting Engineers Services, Management Consultancy Services etc. used for construction of stadium and the stadium was rented out on which the appellant is paying the service tax under the head of Renting of Immovable Property Services.
5. In view of this undisputed fact, the services of Architect, Consulting Engineering, Management Consultant etc. are the input services used for setting up the stadium and the output services of the appellant is Renting the Immovable Property on which service tax was discharged. The CBEC Circular No. 98/01/2008-ST dated 04.01.2008, which is the sole basis for denied of Cenvat Credit is absolutely contrary to the unambiguous definition of input service which includes the input service and credit is allowed. In support of their submission, Ld. Counsel placed reliance on the following judgments:
1. Navaratna S.G. Highway Prop. Pvt. Ltd. V/s Commr. of S.T., Ahmedabad 2012 (28) S.T.R. 166 (Tri.- Ahmd.)
2. Laxmi Enterprise V/s Commr. of C.Ex. & S.T., Vadodara 2014-TIOL-2042-CESTAT-AHM
3. Varun Industries V/s Commr. of C.Ex. & S.T., Rajkot
- 2015 (317) E.L.T. 731 (Tri.- Ahmd.)
4. Sai Samhita Storages Pvt. Ltd. V/s C.C. & C.E., Visakhapattnam-II 2010 (255) E.L.T. 91 (Tri.- Bang.)
5. C.C.E., Visakhapattnam-II V/s Sai Samhita Storages Pvt. Ltd. 2011 (270) E.L.T. 33 (A.P.)
6. Shri A. K. Goswami, Ld. Commissioner (AR) appearing on behalf of the Revenue reiterates the impugned order. He submits that from the Board Circular No. 98/01/2008-ST dated 04.01.2008, it is very clear that commercial or industrial construction service or works contract service is an input service for the output namely immovable property. Immovable property neither subject to Central Excise duty nor Service Tax. The input credit of service tax can be taken only if the output is a service liable to Service Tax or a goods liable to Excise duty. Since immovable property is neither service nor goods, input credit cannot be taken. He further submits that Ld. Commissioner has rightly applied the Board Circular for the reason that it is a settled legal position by the Honble Apex Court that Board Circular is binding on the departmental officer.
7. We have carefully considered the submissions made by both the sides.
8. The issue involved is whether the services such as Architect Services, Consulting Engineers Services, Management Consultancy Services etc. used for construction of sports stadium are admissible input services for taking Cenvat Credit as against the output service of the appellant i.e. renting of the said stadium and other services on which services, service tax was discharged. Whether the service is input service or otherwise, it can be ascertained only on the basis of definition of input service as provider under Rule 2(l) of Cenvat Credit Rules, 2004, which is reproduced below:
Input Services- As per Rule 2(l) of Cenvat Credit Rules, 2004, (prior to 1.4.2011) input service means any service,
(i) Used by a provider of taxable service for providing an output service, or
(ii) Used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal, and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal. From the above definition of input service, any service used by a provider of taxable service for providing an output service is admissible input service. Input service specifically includes amongst others services used in relation to setting up, premises of provider of output service or an office relating to such premises. On the analysis of the definition, it becomes clear that the input service is not limited to the services for providing output service, but it also includes the service for setting up the premises of provider of output service. In the present case the input services are Architect Services, Consulting Engineers Services, Management Consultancy Services etc. used for setting up the premises i.e. stadium of provider of output service i.e. the appellant. The output service is renting of stadium and other miscellaneous services. In view of this undisputed position of law, the services, used by the appellant for setting up the stadium, are input services and squarely covered by definition of input service as reproduced above. The Board Circular appears to have been travelled absolutely contrary to the clear and plain language of the definition of the input service. It is very pertinent that legislators knowing fully that there is no tax or excise duty on the constructing premises of the output service provider, included services used for setting up of the premises of provider of output service, for the simple reason that if the premises are used for providing the output service, the credit of input services used for setting up the premises of service provider must be allowed.
9. In view of this clear and unambiguous definition of input service, it is apparent that the Circular is contrary to the definition of input service which is not tenable. We found that the judgments, relied upon by the counsel, are directly applicable in the present case. However the Ld. Commissioner brushed aside the judgment only giving excuse that he is bound by the Board Circular. In the case of Navaratna S.G. Highway Prop. Pvt. Ltd. (supra), the division bench of Ahmadabad Tribunal in the identical case allowed the Cenvat Credit on the input services used for construction of immovable property which in turn used for renting and other services. The operative para is reproduced below:
3.2 The definition of inputs is limited to the definition of input services as can be seen from the definition given above. Credit of duty paid on inputs is available when the inputs are used for providing an output service. Therefore, there is a need to say that the inputs have been used for providing an output service. In the case of input service, the definition includes input services used by a provider of taxable service for providing an output service. Therefore the definition of inputs and input service are pari materia as far as the service providers are concerned. That being the position, the decision of the Honble High Court of Andhra Pradesh would be applicable to the present case. In that decision of the Honble High Court took the view that without use of cement and TMT bars for construction of warehouse assessee could not have provided storage and warehousing service. In this case also, without utilizing the service, mall could not have been constructed and therefore the renting of immovable property would not have been possible. The issue involved is squarely covered by the decision of the Honble High Court of Andhra Pradesh. Since the service tax demand itself is not sustainable, the question of imposition of penalty does not arise. The appeal is allowed with consequential relief to the appellants. Relying on the aforesaid judgment, this Tribunal in the case of Laxmi Enterprise and Varun Industries taken the consistent view and allowed the Cenvat Credit in respect of input services used for construction of godown/other immovable properties which were used for renting services. In another case of Sai Samhita Storages Pvt. Ltd., passed by Tribunals Bangalore bench which was upheld by the Honble High Court of Andhra Pradesh, the fact was that cement and TMT bars were claimed as inputs for construction of warehouse which was used for providing storage and warehouse services. The Honble High Court held that without use of cement & TMT bars storage and warehouse services could not have been provided, accordingly Cenvat Credit was allowed on cement and TMT bars. In view of the above findings, not only by this Tribunal but also endorsed by the Honble High Court of Andhra Pradesh that the Cenvat Credit on inputs and input services are admissible for construction, which is used for providing output services. We are also of the considered view that in the present case the appellant has clearly entitled for Cenvat Credit in respect of all the services used for construction/setting up the stadium which is admittedly used for providing the output services.
10. In view of above discussion, we set aside the impugned order and allow the appeal, with consequential relief, if any, in accordance with law.
(Operative order Pronounced in court) P.S. Pruthi Member (Technical) Ramesh Nair Member (Judicial) saifi 10 Appeal No. ST/83/12-Mum