2017 (4) TMI 954 - AT - Service Tax

Management Consultancy Services - appellants carried out various research, development project, training programmes, acting as nodal agency on behalf of different Ministries of the Central Government and Madhya Pradesh Government. Revenue entertained a view that the appellants are liable to service tax in respect of these activities carried out on behalf of the various government Ministries - case of appellant is that the appellants did provide service, which can be categorized under the various taxable categories like Consulting Engineer, Convention Service, Management Consultants and Market Research Agency and it cannot be said that they are an arm of the Government and they are rendering these services as an executory function of the Government. Held that - The appellants were to submit full records of the expenditure with reference to each project to the concerned Ministry. Any surplus of the amount given as grant should be returned to the Government. We find that the decision of the Tribunal in Apitco Ltd. 2010 (7) TMI 176 - CESTAT, BANGALORE , is squarely applicable to the facts of the present case where there was no payment, by any government to the assessee, of any amount in excess of what is called grant-in-aid . Thus any service provider-client relationship between the assessee and the governments is ruled out. The appellants are not liable to service tax in respect of these activities carried out, by using the grant-in-aid given by the various Ministries/departments of the Government. Though the appellant claimed in the appeal that the invoices indicated that the amount is inclusive of service tax, no evidence is submitted to support such contention. As such, we find that the same requires verification of the actual invoices by the jurisdictional officer. CENVAT credit - denial on the ground that the invoices were not in the appellant s name but were not in the name of branch/head office - Held that - denial of credit only on the ground that the address of branch office or head office was mentioned instead of appellant s address cannot be the ground for denial of otherwise eligible cenvat credit. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Service tax liability on activities carried out with grants-in-aid from government ministries.
2. Denial of cum-tax benefit.
3. Denial of cenvat credit.
4. Denial of credit on catering services.

Detailed Analysis:

1. Service Tax Liability on Activities with Grants-in-Aid:
The appellant, a company providing consultancy services, received grants-in-aid from various government ministries for executing projects. The Revenue demanded service tax on these activities under "Management, Consultancy Services." The Original Authority confirmed the service tax liability. The appellant argued that their activities, funded by grants-in-aid, did not constitute a service provider-client relationship and cited the Tribunal's decision in Apitco Ltd. The Tribunal had ruled that grants-in-aid used for welfare schemes did not attract service tax as there was no consideration for any service provided to the government. The Tribunal's decision was upheld by the Supreme Court, making it a binding precedent. The Original Authority's attempt to distinguish this case from Apitco Ltd. was found to be without merit. The Tribunal concluded that the appellant's activities funded by grants-in-aid were not liable for service tax.

2. Denial of Cum-Tax Benefit:
The appellant contended that the amounts received were inclusive of service tax, as indicated in the invoices, and thus they were entitled to calculate tax on a cum-tax basis as per Section 67(2) of the Finance Act, 1994. The Original Authority did not provide detailed findings and simply cited a case law. The Tribunal noted that if the invoices indicated that the amounts were inclusive of service tax, the appellant should be entitled to the benefit. This matter was remanded for verification by the jurisdictional officer.

3. Denial of Cenvat Credit:
The Original Authority denied cenvat credit of ?22,500/- on the grounds that the invoices were in the name of the branch or head office, not the appellant. The Tribunal found this reasoning insufficient, as there was no allegation that the input services were not received or were ineligible under the Cenvat Credit Rules, 2004. The denial of credit on this ground was overturned.

4. Denial of Credit on Catering Services:
The appellant did not provide specific details or a defense regarding the denial of cenvat credit for catering services. Consequently, the Tribunal upheld the Original Authority's decision to deny credit for catering services.

Conclusion:
The appeals were allowed concerning the service tax liability on activities funded by grants-in-aid and the denial of cenvat credit of ?22,500/-. The issue of cum-tax benefit was remanded for verification. The denial of credit on catering services was upheld. The appeals were disposed of accordingly.

Order Pronounced on 19.04.2017