2018 (3) TMI 187 - AT - Service Tax

Classification of services - different classification of services at suppliers end and at recipient s end - Held that - there cannot be different classification for the same services at the end of service provider and at the end of service recipient - in the case of M/s. Piem Hotels Ltd, 2016 (4) TMI 290 - CESTAT MUMBAI , the Tribunal has held that it is well settled proposition of law that jurisdictional officer at recipient end are not empowered to question or change the classification or valuation at supplier s end - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against rejection of appeals by Commissioner(Appeals) and upheld Orders-in-Original along with interest and penalty on service tax, interest, and penalty. Whether the appellants availed and utilized entire credit on input services correctly, specifically related to services provided by M/s. Indian Hotels Company Ltd. Whether services received from M/s. Indian Hotels Company Ltd. classified as Business Auxiliary Service or Business Support Service, or as management consultancy service. Whether the impugned order passed contrary to law and binding judicial precedent. Whether the services availed by the appellants classified as input services for the purpose of CCR, 2004. Whether denial of credit of service tax paid at the service recipient and service receivers end justified.

Analysis:
The appellants filed appeals against the common impugned order passed by the Commissioner(Appeals), which rejected the appeals and upheld the Orders-in-Original along with interest and penalty. The issue involved in both appeals was identical, leading to their disposal through a common order. The details of the appeals included the period, service tax amount, interest, and penalty for each appeal. The facts of the case revealed that the appellants provided taxable and non-taxable services in their hotel, with eligibility for service tax credit only on the portion of service consumed for providing taxable service. The dispute arose when the Department found that the appellants had availed and utilized the entire credit on input services provided by M/s. Indian Hotels Company Ltd., which were initially classified as 'Management Consultancy Service.' However, upon examination of invoices and agreements, the Department classified the services as Business Auxiliary Service or Business Support Service, leading to the denial of full credit as per Rule 6(5) of CENVAT Credit Rules, 2004. Show-cause notices were issued, and the original authority confirmed the demand, resulting in the filing of appeals by the appellants.

During the hearing, the appellant's counsel argued that the impugned order was not sustainable as it contradicted the law and binding judicial precedent. They contended that the services availed were in connection with taxable services, making them input services eligible for CENVAT credit. The counsel emphasized a broad interpretation of the term 'input service' and highlighted that services received for taxable and non-taxable services were the same, justifying the classification as input services under CCR, 2004. They also argued that services from Indian Hotels were management consultancy services, not business auxiliary/support services, citing various legal authorities to support their position. On the other hand, the Assistant Commissioner reiterated the findings of the impugned order.

After considering the submissions and the legal authorities cited by the appellant, the Judicial Member concluded that the issue had been settled by previous decisions. It was established that there cannot be different classifications for the same services at the provider and recipient ends. Referring to specific cases and the Tribunal's decision in the appellant's similar case, the Judicial Member found that the impugned orders were not sustainable in law. Consequently, the orders were set aside, and both appeals of the appellants were allowed. The operative portion of the order was pronounced in open court on 03/01/2018.