2016 (12) TMI 1465 - AT - Service Tax

Appellant's Service Tax Classification Appeal Dismissed for Pension Fund Contribution Error

Metro Global Business Services P. Ltd. Versus CCE, Pune-III

The Tribunal dismissed the appellant's application seeking rectification of a mistake in the final order regarding service tax liability classification ... Rectification of mistake - refund - Held that: - the amount of service tax discharged by the appellant is under reverse charge mechanism, which is in respect of the payment made by the appellant to their principal situated abroad for the contribution made to the pension of the Board members. This service cannot be classified under Business Auxiliary Service by any stretch of imagination. The definition of Business Auxiliary Service will not cover the payment made by the appellant as it is towards the pension fund and not any services rendered - no error apparent on the face of records - application of ROM dismissed. Issues:Rectification of mistake in final order regarding service tax liability classification and refund denial.Analysis:The appellant filed an application seeking rectification of mistake in the final order dated 01.01.2016, claiming that the Tribunal did not address the grounds raised in the appeal. The appellant argued that although they had discharged the service tax liability in 'other taxable services,' the nature of the service was Business Auxiliary Service, and the payment of service tax under the wrong accounting code was a procedural defect. The appellant contended that the substantive benefit of refund should not be denied. After hearing both sides and examining the records, the Tribunal found no merit in the application. The Tribunal stated that the appellant's case was based on the non-granting of a refund, even though they had paid service tax under a different head. The Tribunal noted that the service tax discharged by the appellant was under the reverse charge mechanism for the payment made to their principal abroad for the contribution to the pension of the Board members. The Tribunal opined that this service could not be classified under Business Auxiliary Service, as it was towards the pension fund and not for any services rendered. Consequently, the Tribunal dismissed the miscellaneous application filed by the appellant.This judgment highlights the importance of correctly classifying service tax liabilities and the implications of using the wrong accounting code. It clarifies that payments made towards specific funds, such as pension funds, may not fall under certain service categories, emphasizing the need for precise categorization to avoid procedural defects and refund denials. The decision underscores the significance of understanding the nature of services rendered to determine the appropriate tax treatment and eligibility for refunds.