2017 (6) TMI 536 - AT - Service Tax

CENVAT credit - eligible input service - airport services - case of appellant is that once the Department has accepted the service tax paid by GHIAL under Airport Services, CENVAT credit cannot be denied by changing of classification of the recipient - Held that - It is un-disputed that appellants employees are transported from various places in the city to registered office. Which is situated in the GHIAL premises and the services rendered by the appellants are taxed, the CENVAT credit availed by the appellant cannot be called in question since the Revenue has accepted the service tax paid for the services rendered by the GHIAL for the appellants. Similar issue decided in the case of Sarvesh Refractories (P) Ltd., Vs. CCE & C 2007 (11) TMI 23 - SUPREME COURT OF INDIA , where it was held that in so far as the classification is arrived at by the manufacturer and discharges the duty liability, the CENVAT credit cannot be denied on such capital goods by re-classifying the same at recipients end. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against Order-in-Appeal No. 33/2014 (H-IV) S.Tax dated 31.01.2014 and Order-in-Appeal No. 73/2014 (H-IV) ST dated 12.03.2013.

Analysis:
1. The appellant provided specialized Manpower and Management Services at an airport, with employees transported by the airport operator. The appellant availed CENVAT credit on services like rent-a-cab and Business Support Services. Show Cause Notices were issued for demand of CENVAT credit availed on these services. The Revenue contended that the credit availed did not fall under the correct category. The adjudicating authority confirmed demands for reversal of CENVAT credit under Airport Services. The first appellate authority upheld these orders.

2. The appellant argued that since the airport operator discharged service tax under Airport Services, the CENVAT credit cannot be denied based on reclassification. Various case laws were cited to support this argument. The appellant maintained that the services received were correctly classified under Airport Services, and no penalty should be imposed.

3. The Departmental Representative argued that the services provided were in the category of supply of tangible goods or rent-a-cab services, not Airport Services. He emphasized the need for nexus between input and output services for availing CENVAT credit. The representative cited a Supreme Court decision to support the argument that transportation of employees cannot fall under Airport services.

4. The Tribunal considered the submissions and noted that the airport operator discharged service tax under Airport Services for transporting the appellant's employees. Since there was no dispute on this discharge, the appellant's availing of CENVAT credit on this tax payment was justified. The Tribunal referred to previous cases where reclassification by service providers did not affect CENVAT credit at the recipient's end.

5. The Tribunal found merit in the appellant's argument citing a Supreme Court judgment that upheld CENVAT credit when the classification was done by the service provider. The Tribunal set aside the impugned orders, allowing the appeals with consequential relief.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing the validity of availing CENVAT credit based on the service tax paid by the airport operator under Airport Services. The Tribunal highlighted the importance of consistent classification by service providers and upheld the appellant's right to avail CENVAT credit in this case.