2017 (5) TMI 703 - AT - Service Tax

Appellant's CENVAT Credit Upheld for Airport Services: Importance of Correct Tax Discharge

GMR Airport Developers Ltd. Versus CC, CE & ST, Hyderabad-II & IV

The Tribunal upheld the appellant's CENVAT credit on service tax paid by GHIAL under Airport Services. It emphasized the importance of correct tax ... CENVAT credit - classification of service at the recipient's end - case of appellant is that once the Department has accepted the service tax paid by GHIAL under Airport Services, CENVAT credit cannot be denied by changing of classification of the recipient - whether the appellants have correctly availed the CENVAT credit on service tax paid by GHIAL under the Airport Services or otherwise? - Held that: - It is un-disputed that appellants employees are transported from various places in the city to registered office, which is situated in the GHIAL premises and the services rendered by the appellants are taxed, the CENVAT credit availed by the appellant cannot be called in question since the Revenue has accepted the service tax paid for the services rendered by the GHIAL for the appellants. The decision of the Hon'ble Apex Court in the case of Servesh Refractories (P) Limited [2007 (11) TMI 23 - SUPREME COURT OF INDIA] directly applies in the case in hand where it was held that in so far as the classification is arrived at by the manufacturer and discharges the duty liability, the CENVAT credit cannot be denied on such capital goods by re-classifying the same at recipients end. Credit allowed - appeal allowed - decided in favor of appellant. Issues:- Correct availment of CENVAT credit on service tax paid by GHIAL under Airport Services.- Classification of services provided by GHIAL to the appellant.- Nexus between input services and output services for CENVAT credit.- Application of relevant case laws in determining CENVAT credit eligibility.- Interpretation of statutory provisions regarding CENVAT credit.Analysis:1. Correct Availment of CENVAT Credit: The appellant, registered for various taxable services, availed CENVAT credit on service tax paid by GHIAL under Airport Services. The Revenue disputed the CENVAT credit, alleging misclassification of services. However, since GHIAL discharged service tax under Airport Services without contest from the Department, the appellant's CENVAT credit cannot be questioned. The Tribunal cited precedents like Castrol India Ltd. and held that once the service provider correctly classifies and discharges tax liability, the recipient's CENVAT credit is valid.2. Classification of Services: The Department argued that the services received by the appellant were for transportation of employees, falling under supply of tangible goods or rent-a-cab services, not Airport Services. The appellant contended that GHIAL's service tax payment under Airport Services validated their CENVAT credit. The Tribunal emphasized that the Revenue did not contest GHIAL's service tax classification, supporting the appellant's CENVAT credit claim.3. Nexus for CENVAT Credit: The Department highlighted the lack of nexus between the services provided by the appellant and GHIAL's Airport Services. They argued that the service provider's classification should align with the recipient's CENVAT credit eligibility. However, the Tribunal upheld the appellant's CENVAT credit based on GHIAL's correct tax discharge and service provision.4. Application of Case Laws: The appellant referenced various case laws to support their CENVAT credit claim, emphasizing that once the service tax is correctly paid by the provider, the recipient's credit is valid. The Tribunal agreed with this interpretation, citing legal precedents and the principle that the recipient's credit should not be denied based on reclassification by the service provider.5. Interpretation of Statutory Provisions: The Tribunal analyzed the statutory provisions and case laws to determine the validity of the appellant's CENVAT credit. They emphasized the importance of upholding the credit when the service provider correctly pays the service tax, aligning with the recipient's eligibility. The judgment in this case set aside the impugned orders and allowed the appeals with consequential relief.In conclusion, the Tribunal upheld the appellant's CENVAT credit on service tax paid by GHIAL under Airport Services, emphasizing the importance of correct tax discharge by the service provider and validating the recipient's credit based on such classification. The judgment highlighted the legal principles and precedents supporting the appellant's claim, ultimately setting aside the disputed orders and allowing the appeals.