No reversal of Cenvat credit if output service was taxed before receipt of completion certificate.
Where assessee was engaged in development of real estate projects and it availed cenvat credit of service tax paid on various input services used to construct residential complex and it obtained Completion Certificate for residential projects on 24-2-2014 and it had given due intimation to Competent Authority that it shall be availing only proportionate cenvat credit of service tax paid on input service received after date of obtaining Completion Certificate and revenue issued on it notice demanding 8 per cent/10 per cent amount of sale of immovable property after obtaining completion certification, assessee was not liable to pay an amount equal to 8 per cent/10 per cent of sale price of immovable property after receipt of Completion Certificate and it was also not required to reverse any credit which was availed by it during period when output service was wholly taxable in its hands
– Section 16 of the Central Goods and Services Tax Act, 2017/Rule 3, read with rule 6, of the Cenvat Credit Rules, 2004 – Input tax credit
– Eligibility and conditions for taking credit
– Assessee was engaged in development of real estate projects
– It availed cenvat credit of service tax paid on input services used to construct residential complex
– It obtained Completion Certificate for residential projects on 24-2-2014
– It had given due intimation to Competent Authority that it shall be availing only proportionate credit of service tax paid on input service received after date of obtaining Completion Certificate
– In meanwhile, CERA auditors audited account books of assessee and asked it to reverse cenvat credit/pay a certain amount towards proportionate cenvat credit availed by it during period 2010-11 till date of obtaining Completion Certificate
– Revenue also issued on assessee show cause notices demanding 8 per cent/10 per cent amount of sale of immovable property after obtaining Completion Certificate
– Whether since assessee had taken only proprtionate credit of service tax paid on input services after obtaining completion certificate duly backed by CA certificate, it had fulfilled its obligation under rule 3 read with rule 6 and as such it was not liable to pay an amount equal to 8 per cent/10 per cent of sale price of immovable property after receipt of completion certificate
– Held, yes
– Whether assessee was not legally required to reverse any credit which was availed by it during period 2010 till date of obtaining completion certificate, i.e., during period when output service was wholly taxable in its hands
– Held, yes
[Paras 11 and 19] [In favour of assessee]
Circulars and Notifications: Clarification No. 334/1/2007 – TRU, dated 28-2-2007
