2017 (4) TMI 499 - AT - Service Tax

Cenvat credit - Inputs, capital goods and input services in terms of CCR, 2004 - classification of the service should be under supply of tangible goods - Held that - We find the present plea taken by the Revenue is entirely on different ground not agitated before the lower authority. Further, it is well settled position of law that the credit availed by an assessee cannot be denied or varied on the ground that the classification of service should have been made in a different category by the provider of service. Variation in the classification or consequent rate of payment of Service Tax is not possible at the end of the recipient of service. There is nothing on record to state that the category of service or payment of Service Tax has been varied during the material time by the provider of service - Appeal dismissed - Decided against the Revenue.

Issues:
1. Eligibility of availing Cenvat credit on mining and excavation services.
2. Classification of services under "supply of tangible goods service" for Service Tax.
3. Validity of denying input service credit based on different classification of services.

Analysis:
1. The appeal addressed the eligibility of availing Cenvat credit on mining and excavation services by the respondent. The original authority had held that these services were covered under the definition of input services as they were used directly in the manufacture of the final product, cement. The authority found the respondent eligible for the credit and dropped the demands raised by the Revenue. The Revenue contended that the services received should be classified under "supply of tangible goods service" and hence no Service Tax was required to be paid on these services until 15-5-2008. However, the Tribunal noted that the plea taken by the Revenue was not raised before the lower authority. It was established that the credit availed by the respondent cannot be denied based on a different classification of services by the service provider. Therefore, the Tribunal dismissed the appeal by the Revenue, upholding the eligibility of the respondent for availing the Cenvat credit on mining and excavation services.

2. The issue of classification of services under "supply of tangible goods service" for Service Tax was raised by the Revenue in the appeal. The Tribunal observed that the Revenue's argument on the classification of services was not raised before the lower authority during the adjudication process. It was emphasized that the classification of services or the consequent rate of payment of Service Tax cannot be altered at the recipient's end based on a different categorization by the service provider. The Tribunal highlighted that without any evidence of a change in the category of service or the payment of Service Tax during the relevant period, the appeal by the Revenue had no legal basis. Consequently, the Tribunal dismissed the appeal, affirming that the classification of services for Service Tax purposes could not be altered retroactively without proper grounds or documentation.

3. The Tribunal examined the validity of denying input service credit based on a different classification of services by the Revenue. It was noted that the Revenue's argument regarding the classification of services under "supply of tangible goods service" was not raised during the original adjudication process. The Tribunal reiterated that the credit availed by the respondent could not be denied or altered based on a subsequent change in the classification of services for Service Tax purposes. Without any evidence of a modification in the category of service or the payment of Service Tax during the relevant period, the Tribunal concluded that the appeal by the Revenue lacked legal merit. Therefore, the Tribunal dismissed the appeal, emphasizing that the denial of input service credit should be based on valid grounds supported by relevant facts and legal provisions.

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