2018 (3) TMI 188 - 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 appellant's appeal by Commissioner(Appeals) regarding availing CENVAT credit on input services provided by M/s. Indian Hotels Co. Ltd. under management consultancy, classification of services as Business Auxiliary Service, and denial of full credit under Rule 6(5) of CENVAT Credit Rules, 2004.

Analysis:

1. Classification of Input Services:
The appellant availed CENVAT credit on services provided by M/s. Indian Hotels Co. Ltd. under management consultancy during 2008-09 and 2009-10. The Department contended that these services were Business Auxiliary Services, not Management Consultancy Services, thus disallowing full credit under Rule 6(5) of CENVAT Credit Rules, 2004. Show-cause notices were issued, and the original authority confirmed the demand. The Commissioner(Appeals) also rejected the appeal. The appellant argued that the services availed were in connection with taxable services on which service tax was duly paid, thus qualifying as input services under Rule 2(I) of CCR 2004. The appellant emphasized that any service related to taxable services could be used for availing CENVAT credit. Additionally, they asserted that services from Indian Hotels were indeed management consultancy services, not business auxiliary/support services. The appellant cited various legal precedents to support their argument.

2. Legal Precedents and Interpretation:
The appellant relied on several legal authorities to support their contention, including cases like Sarvesh Refractories (P) Ltd. Vs. CCE, CCE Vs. MDS Switchgear, Hindustan Lever Ltd, and others. These cases established that there should not be different classifications for the same services at the end of the service provider and the service recipient. The Tribunal's decision in the appellant's own case on a similar issue further supported the argument that the impugned order was not sustainable in law. The Tribunal emphasized that jurisdictional officers at the recipient end are not authorized to question or alter the classification or valuation at the supplier's end.

3. Judicial Review and Decision:
After hearing both parties and examining the records and legal arguments presented, the Tribunal concluded that the issue at hand had been settled by previous decisions. It was held that different classifications for the same services at the provider and recipient ends were impermissible. The Tribunal also noted that the Commissioner(Appeals) had previously allowed a similar case on an identical issue and that the Tribunal had ruled in favor of the appellant in a previous case. Therefore, the Tribunal set aside the impugned order, allowing the appeal of the appellant.

In conclusion, the Tribunal's decision was based on the interpretation of input services, legal precedents, and the consistency in classification of services between the provider and recipient. The judgment highlighted the importance of following established legal principles and previous decisions in resolving disputes related to CENVAT credit and service tax classification.