2016 (9) TMI 1059 - AT - Service Tax

Cenvat credit - various services of repairs, renovation and modernization of the premises - service provider has categorized the services under work contract service and discharged the service tax liability - Held that - the service provider provided the services under the head of work contract service and discharged the service tax liability accordingly. Therefore, the service which is received by the appellant is of works contract service though it is for the purpose of renovation and modernization of the premises. The appellant is not entitled for Cenvat credit. There cannot be different yardstick for the purpose of classification of service at the service providers and classification of the same service in the recipient end. It is pertinent to note that if as per nature of service, Cenvat credit is decided then exclusion clause provided to works contract service in the definition of input service will become redundant for the reason that in works contract service , the nature of service involved is like, renovation, repairs, construction, erection, installation and like. These individual service may be input service but if the same service is provided in the forum of works contract service , the same will fall under exclusion clause. In the present case, since the services of renovation and modernization were provided by the service provider in the form of works contract which is excluded from the definition of input service, Cenvat credit was rightly denied. - Decided against the appellant

Summary

Issues:
Whether the appellant is entitled to Cenvat credit for services of repairs, renovation, and modernization categorized under works contract service by the service provider.

Analysis:
The main issue in this case revolves around the eligibility of the appellant to claim Cenvat credit for services received under works contract service classification by the service provider. The appellant argues that the services of renovation and modernization fall under the inclusion clause of the definition of input service, making them eligible for the credit. However, the Revenue contends that the services were correctly classified under works contract service, leading to the denial of Cenvat credit.

The judge carefully considered both sides' submissions and focused on the classification of services provided by the service provider. The judge emphasized that when the service provider categorizes services under works contract service and pays service tax accordingly, the recipient cannot dispute the classification. Works contract service encompasses various services, including renovation and modernization, and if the provider chooses this classification, it falls under the exclusion clause of input service, rendering the recipient ineligible for Cenvat credit.

The judge highlighted that individual services like renovation and modernization could be considered input services if classified and taxed separately. However, when provided under works contract service, they are excluded from the definition of input service. Therefore, in this case, since the services were provided as works contract service by the provider, the appellant's claim for Cenvat credit was rightfully denied. The judgment upholds the decision of the Ld. Commissioner (Appeals) and dismisses the appellant's appeal, emphasizing the uniform classification of services between the provider and recipient.

In conclusion, the judgment clarifies that the nature of service and its classification by the service provider are crucial in determining the eligibility for Cenvat credit. The exclusion clause for works contract service prevents double benefit for services already covered under this classification. Thus, in cases where services are provided under works contract service, the recipient cannot claim Cenvat credit, even if the nature of the services could qualify as input services when classified separately.