Architect Service, Telephone Expenses For Construction Of Hotel Are Input Services: CESTAT Allows Cenvat Credit On Service Tax

The Mumbai Bench of the Customs, Excise, and Service Tax Tribunal (CESTAT) has allowed the Cenvat Credit on Service Tax paid on architect services; telephone expenses, etc. for construction of hotel are input services.

The bench of Anil G. Shakkarwar (Technical Member) has observed that CENVAT Credit on input services used to bring immovable property into existence is eligible for CENVAT Credit.

The appellant/assessee provides taxable services and is registered in Mumbai. They have constructed two hotels, one in Delhi and another in Hyderabad. They have availed themselves of CENVAT credit for service tax paid on architect services, telephone expenses, security services, legal and professional services, structural consultancy services, soil investigation work, fabrication, and irrigation.

The services were utilised for the construction of hotels in Hyderabad and Delhi. The issue is whether, after amendments to the definition of input service under Rule 2(l) of the CENVAT Credit Rules, 2004, with effect from April 1, 2011, the said CENVAT Credit was admissible to the appellant or not, specifically after the words "setting up" were deleted from the definition. The lower authorities have held that the construction of hotel premises in Hyderabad and Delhi was set up and therefore denied the CENVAT credit part.

The assessee contended that input services are availed by the appellant in the works contract services, project management services, and structural professional services used for the construction of a building, which are subsequently to be used for rendering the taxable output services.

The tribunal, while allowing the appeal, held that the services, such as architect services, telephone expenses, etc., were input services, and therefore the service tax paid on the services is eligible as CENVAT credit to the appellant.

Case Title: M/s Asrani Inns & Resorts Pvt. Ltd. Versus Commissioner of Central Goods & Service Tax Navi Mumbai

Citation: Service Tax Appeal No. 87325 of 2019

Date: 22.02.2023

Counsel For Appellant: Keval Shah

Counsel For Respondent: Prabhakar Sharma

Click Here To Read The Order