Gujarat Jhm Hotels Ltd VERSUS C.C.E. & S.T.-Surat-i

Service Tax Appeal No.10877 of 2013

(Arising out of OIO-19-20/SERVICETAX/2012 dated 23/01/2013 passed by Commissioner of

Central Excise, Customs and Service Tax-SURAT-I)

 

Gujarat Jhm Hotels Ltd

VERSUS

C.C.E. & S.T.-Surat-i

With

Service Tax Appeal No.10878 of 2013

(Arising out of OIO-19-20/SERVICETAX/2012 dated 23/01/2013 passed by Commissioner of

Central Excise, Customs and Service Tax-SURAT-I)

Gujarat Jhm Hotels Ltd

VERSUS

C.C.E. & S.T.-Surat-i

 

APPEARANCE:

Shri T.C. Nair, Advocate for the Appellant

Shri Prabhat Rameshwaram, Additional Commissioner (AR) for the Respondent

CORAM: HON’BLE MEMBER (JUDICIAL), MR. RAMESH NAIR

HON’BLE MEMBER (TECHNICAL), MR. RAJU

Final Order No. A/10189-10190 /2023

DATE OF HEARING: 10.01.2023

DATE OF DECISION: 01.02.2023

RAMESH NAIR

The issue involved are as under:-

 Whether 100% credit of service tax paid by Indian Hotel Co. Ltd.

(IHCL) under Management or Business Consultancy Services is

admissible to Gujarat JHM Hotels (Appellants) in view of specific

coverage of the said service under Rule 6(5) of CCR, even though said

services were used for taxable as well as non-taxable/exempt

services;

 Whether the jurisdictional Officers of the Appellants are empowered to

question the correctness or change the classification of service

adopted by the provider of such service;

 Whether extended period and penal provisions are invocable in the

absence of any suppression of fact, willful mis-statement etc. any, in

any case, when the disputed issue pertains to interpretation of law…

(Appeal No. ST/10877/2013)

2. Shri T.C. Nair, learned counsel appearing on behalf of the appellant

submits that the service provider M/s. Indian Hotels Co. Ltd. has provided

service under the head of Management or Business Consultancy Services

which is specified under Rule 6(5) of Cenvat Credit Rules, 2004 therefore,

the appellant is entitled for 100% credit on such input service irrespective of

whether the same was used in exempted as well as taxable service. He

further submits that the issue of classification cannot be raised at the service

recipient end. Moreover, in case of M/s. Indian Hotels Co. Ltd., the

department had raised the classification issue on the similar services

however, the matter was decided by this tribunal whereby, it was held that

the service of M/s. Indian Hotels Co. Ltd. provided to the various hotels

similarly placed as the present appellant are Management or Business

Consultancy Services and do not fall under Business Auxiliary Service as

claimed by the revenue therefore, the issue is no longer under dispute. He

placed reliance on the following judgments:-

 Piem Hotels Ltd.- 2016 (43) STR 211 (T)

 Taj GVK Hotels & Resorts- 2018 (18) GSTL 475 (T)

 Newlight Hotels & Resorts Ltd.- 2016 (44) STR 258 (T)

 Piem Hotels Ltd., Lucknow- 2019 (99) GSTL 328 (T)

2.1 He further submits that the part of the demand is clearly time barred

in absence of any conscious and deliberate suppression, mis-statement, etc.

in view of filing ST-3 Returns showing availment of credit, maintaining

cenvat account, audit of records, visits by the Officers, etc. hence, extended

period and penal provisions are not invocable.

3. Shri Prabhat K. Rameshwaram, Learned Additional Commissioner (AR)

appearing on behalf of the revenue reiterates the finding of the impugned

order.

4. On careful consideration of the submission made by both the sides and

perusal of records, we find that in the present case the cenvat credit was

denied in respect of service received by the appellant from M/s. Indian

Hotels Co.Ltd. on the pretext that the same is classifiable under Business

Auxiliary Service which is not specified under Rule 6(5) of Cenvat Credit

Rules, 2004. The contention of the appellant is that the service provider M/s.

Indian Hotels Co. Ltd. has provided the services under the head of

Management or Business Consultancy Services, accordingly, the

classification of service cannot be challenged at the service recipient end.

Moreover, the classification of same service was challenged by the

department and proceedings were initiated against M/s. Indian Hotel Co.

Ltd., the matter was decided by this tribunal in PIEM HOTELS LTD. case

(supra). The tribunal has passed the following order:-

6. We have considered the rival submissions and perused the records and

find that the nature of service provided by IHCL is of the kind of advice,

consultancy and assistance which are directly in connection with

management of the respective hotels. It is clear from the submissions and

the records that IHCL is not managing or conducting the hotel business of

Piem on their behalf, but are only providing the management consultancy

and advice by posting only key senior personnel to assist Piem to conduct

their hotel business with their own infrastructure and manpower. Further,

it is noticed that IHCL is not providing any service on behalf of Piem to

Piem’s customers, nor are IHCL promoting the hotel business of Piem.

Therefore, the services provided by IHCL to Piem cannot be termed as

Business Auxiliary Service and the services provided by IHCL is squarely

covered under Management or Business Consultant’s Service, classifiable

under Section 65(105)(r) of Finance Act, 1994, which view of ours gets

support from the Tribunal judgments in RPG Enterprise Ltd. – 2008 (11)

S.T.R. 488 (T) and Shervani Indus Syndicate – 2009 (14) S.T.R. 486 (T).

In any case, we are of the view that the change of classification at the end

of IHCL would be prospective and cannot have retrospective operation, as

held by this Tribunal in various judgments cited supra. Since Piem Hotels

have taken credit during the period April, 2005 to September, 2010 and

the classification has been changed at IHCL’s end, through impugned

Order-in-Original dated 25-2-2015, such change in classification would not

affect the credit taken by Piem during the period prior thereto. Therefore,

the jurisdictional authorities at Piem Hotels have committed an apparent

error in denying the credit and it is a well settled position of law that

jurisdictional officers at recipient’s end are not empowered to question or

change the classification or valuation at supplier’s end based on various

judgments of Hon’ble Apex Court. Since we are allowing the appeals

mainly on the ground that the services provided by IHCL is correctly and

appropriately classifiable under Management & Business Consultant’s

Services and not under Business Auxiliary Service and the jurisdictional

officers at recipient’s unit are not empowered to review or revise the

classification at supplier/provider’s end, we are not discussing various

other propositions made by both sides.

7. Both the Appeals are allowed in above terms.

From the above decision, it can be seen that the same services provided by

IHCL to M/s. Piem Hotels Ltd. was held classifiable under Management or

Business Consultancy Services and not under Business Auxiliary Service

accordingly, the Management or Business Consultancy Services clearly

specified under Rule 6(5) of Cenvat Credit Rules, 2004 therefore, the

appellant have correctly taken 100% credit in respect of such input service.

As per this judgment, the entire foundation of the revenue’s case gets

demolished therefore, the demand cannot be sustained on merit. Since the

appeal is decided on merit of the case, we are not inclined to deal with other

issues such as time bar, etc.

5. As per our above discussion and findings, we set aside the impugned

order and allow the appeals.

(Pronounced in the open court on 01.02.2023)

(RAMESH NAIR)

MEMBER (JUDICIAL)

(RAJU)

MEMBER (TECHNICAL)