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ST - CENVAT - Jurisdictional officer at recipient end is not empowered to question or change classification or valuation at supplier's end: CESTAT

By TIOL News Service

BANGALORE, APRIL 27, 2018: THE period involved is 2008-09 and 2009-10.

The assessee, a registered service provider, availed 100% CENVAT credit on the input services provided by M/s. Indian Hotels Co. Ltd. (IHCL) and utilized it for payment of service tax. M/s IHCL had apparently paid service tax under the head ‘Management Consultancy service'.

On examination of agreement between parties, Department opined that the services rendered by M/s IHCL are in nature of Business Auxiliary Service and not Management Consultancy Service and as per Rule 6(5) of CCR, 2004, full credit cannot be taken.

The demand was confirmed by lower authorities and the assessee is now before CESTAT.

It is inter alia submitted that the department cannot deny the credit by altering the classification at the service providers end as held in the following cases -

Sarvesh Refractories (P) Ltd. Vs. CCE - 2007-TIOL-233-SC-CX

CCE Vs. MDS Switchgear - 2008-TIOL-245-SC-CX

Pacific Exports Vs. CCE, Ahmedabad - 2011-TIOL-401-CESTAT-AHM

M/s. Piem Hotels Ltd Vs. CCE, Nasik, CST, Mumbai - 2016-TIOL-788-CESTAT-MUM

Taj Kerala Hotels and Resorts Ltd. Vs. CCE.C&ST, Cochin - 2018-TIOL-12-CESTAT-BANG

The CESTAT, therefore, observed that the issue is no more res integra and it is well settled proposition of law that jurisdictional officer at recipient end is not empowered to question or change the classification or valuation at supplier's end.

Following the ratio of the cited cases and decision of Tribunal dt. 15/11/2017 - 2018-TIOL-12-CESTAT-BANG in assessee's own case involving similar issue, the impugned order was held to be unsustainable in law.

The appeal was allowed.

(See 2018-TIOL-1326-CESTAT-BANG)


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