Credit Allowable on Service Tax Paid on Architectural Services: CESTAT [Read Order]

The Hyderabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has recently held that the Cenvat Credit is allowable to the assessee in respect of the amount paid as service tax on the Architectural services under the Finance Act, 1994.

In the instant case, the appellant Mentor Graphics India Private limited contested the refund claims filed by them in respect of unutilized CENVAT credit. The first appellate authority has allowed refund claims only with respect to few services.

The appellant contested the refund claim of Architectural services, insurance for motor vehicles and other services. The appellant got aggrieved by the decision wherein the first appellate authority has considered the Architectural services as works contracts services and pleaded for setting aside the decision.

After perusing evidence, Mr. M. V. Ravindran Member(Judicial), observed held that the appellant had appointed Edifice Consultants private limited for architectural consultancy in respect of acts of construction of the building. Reversing the order of first appellate authority, the Tribunal held that the said purchase order was for architectural expertise for the construction of the building and cannot be termed as works contract. He added that architect services do not fall under the exclusion to the definition of input service as per rule 2(l) of CENVAT credit rules 2004 as the said exclusion is in respect of execution of works contract.

Further, he pointed out that the said definition has undergone a change multiple times on 1^st April 2011 and 1^st July 2012 and specific exclusion is only for service portion in the execution of works contract.  In the decision, he held that “In my considered view the above findings of 1^st Appellate Authority for rejecting the refund claims for service tax paid on architectural services seems to be incorrect. And the order of the 1^st Appellate Authority is set aside.”