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)
- 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.
- Shri Prabhat K. Rameshwaram, Learned Additional Commissioner (AR)
appearing on behalf of the revenue reiterates the finding of the impugned
order.
- 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:-
- 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.
- 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.
- 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)
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