2025-VIL-1909-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax – Section 65B(44) of Finance Act, 1994 – Rules 2(e) and 6 of Cenvat Credit Rules, 2004 – Construction of residential complex – Demand of reversal of credit – Sustainability – Appellant is carrying on activity of construction services of residential complex at New York City Project – Department opined that after issuance of completion certificate, Appellant was covered under provisions of Rule 6 of the Rules as amended vide Notification No.13/2016-CE and therefore, Appellant was liable to reverse credit of input services pertaining to unsold unit – Adjudicating Authority confirmed demand of reversal of credit – Whether Appellant is required to reverse CENVAT Credit on account of completion certificate with respect to units completed but not booked/unsold as on date of receipt of completion certificate – HELD – On date of completion certificate, 558 units were completed and remaining units were still under construction or had not commenced work. Appellant had availed only eligible credit after issuance of completion certificate. Appellant had placed on record the Chartered Accountant’s Certificate duly certifying that Appellant had reversed proportionate credit towards completed unsold units and availed credit only relating to taxable portion of project after completion date. Notification No.13/2016 inserted Explanation 3 that “exempted service? under Rule 2(e) of the Rules to include an activity which is not a service as defined under Section 65B(44) of the Act had been held to be prospective and therefore, no reversal was required to be made for period till 31-3-2016. No reversal of eligible past credits is permissible under Rule 6 of the Rules by reason of output services becoming non-taxable. Once it is held that reversal is not legally permissible, Appellant is consequently entitled to refund of amount which has been wrongly reversed by wrong interpretation placed by Department. Order under challenge is set aside – Appeals allowed
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