2023 (2) TMI 829 - AT - Service Tax

CENVAT Credit - classification of service - Business Auxiliary Service or Sponsorship Service? - classification of service can be disputed at recipient end or not - denial on the ground that service being classifiable under Sponsorship Service, the appellant was supposed to discharge the service tax under GR-7 Challan - HELD THAT - The service provider M/s. K.P.H. Dream Cricket Pvt. Ltd. has classified the service under Business Auxiliary Service, in such case it is the service provider who is suppose to pay the service tax and the appellant can take the cenvat credit only on the basis of invoice issued by the service provider. The entire basis of the department s case is dispute on the classification made by the service provider M/s. K.P.H. Dream Cricket Pvt. Ltd. M/s. K.P.H. Dream Cricket Pvt. Ltd. has classified the service under Business Auxiliary Service and discharged the service tax and issued the invoice. Firstly, the classification of service cannot be disputed at the recipient end secondly, the classification of service maintained by the service provider M/s. K.P.H. Dream Cricket Pvt. Ltd. has been considered in judgment of M/S COCA COLA INDIA PVT. LTD. VERSUS CST, DELHI-III 2014 (12) TMI 667 - CESTAT NEW DELHI where it was held that Demand of service tax in respect of the same transaction on the ground that the deposit of service tax was under a different category whereas a different category of service has been provided cannot be held to be justifiable. Thus, it can be seen that the only difference is that in the present case the cenvat credit was denied on the same ground on which the service tax was demanded in the above case. The dispute was same that the service falls under Sponsorship Service however, the tribunal in the case of COCA COLA INDIA PVT. LTD. held that at the recipient s end the classification cannot be changed - since the classification of service cannot be challenged at the recipient s end, the cenvat credit availed by them cannot be disputed. Appeal allowed.

Summary

Issues:
Classification of service under Sponsorship Service, denial of cenvat credit based on service classification, liability for service tax, dispute over service classification between Business Auxiliary Service and Sponsorship Service.

Analysis:
The case involved a dispute over the classification of services provided by M/s. K.P.H. Dream Cricket Pvt. Ltd. (KPH) to the appellant for promoting their products. The central issue was whether the service fell under Sponsorship Service or Business Auxiliary Service, impacting the liability for service tax and cenvat credit eligibility. The department contended that the service should be classified as Sponsorship Service, making the appellant liable for service tax under Rule 2(1)(d)(iv) of Service Tax Rules, 1994, and thus not entitled to cenvat credit. The appellant argued that since KPH had paid service tax under Business Auxiliary Service, the classification could not be disputed at the recipient's end, citing relevant case laws.

Upon review, the Tribunal found that KPH had classified the service under Business Auxiliary Service, paid the service tax, and issued the invoice accordingly. The Tribunal emphasized that the classification by the service provider was crucial, and the appellant could claim cenvat credit based on the invoice issued. Referring to a similar case involving COCA COLA INDIA PVT. LTD., the Tribunal highlighted that the recipient could not challenge the classification made by the service provider. The judgment clarified that the appellant's cenvat credit could not be denied based on the disputed service classification, aligning with the principle established in the COCA COLA case.

The Tribunal further referenced the impugned order and the Commissioner (Appeals) decision, which raised the issue of sponsoring a Cricket team falling under Sponsorship Service and the appellant's liability for service tax. However, the Tribunal noted that the service tax had already been paid by KPH under Business Auxiliary Service, and the demand for additional tax under a different category was deemed unjustifiable. Relying on precedents and legal interpretations, the Tribunal set aside the impugned order, allowing the appeal and granting consequential relief to the appellant. The judgment emphasized the importance of service classification by the provider and upheld the appellant's right to cenvat credit based on the service tax payment and invoice issued.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal. The decision highlighted the significance of the service provider's classification in determining liability for service tax and cenvat credit eligibility, emphasizing the principle that the recipient cannot challenge the classification made by the service provider. The detailed analysis considered legal precedents, case laws, and the specific circumstances of the case to provide a comprehensive resolution to the dispute over service classification and its implications on tax liability and credit entitlement.