2018 (7) TMI 1007 - AT - Service Tax

CENVAT Credit - input services - Outdoor Caterer Services - Rent-a-cab Services - Cargo handling services/ Packers and Movers Services - Event Management Services - denial on account of nexus - Held that - The appellant has stated the necessity of availing such services and their nexus with the output services - it is convincing that these services qualify as input services - Further the period involved is prior to 01.04.2011 when the definition of input services had a wide ambit - the disallowance of credit on these input services is unjustified - credit allowed. Reverse charge mechanism - Commercial Coaching and Training Services in India as well as abroad - demand of service tax - Part of the demand falls prior to 18.04.2006 - Held that - It is settled position of law as rendered by the Hon ble Apex Court in the case of Indian National Shipowners Association 2009 (12) TMI 850 - SUPREME COURT OF INDIA that an assessee would be liable to pay service tax under reverse charge mechanism for the services provided abroad only w.e.f. 18.04.2006. The demand prior to 18.04.2006 cannot therefore sustain - demand set aside. For the period post 18.04.2006 - Penalty - service tax with interest was paid - Held that - The issue whether an assessee is liable to pay service tax on reverse charge basis was under litigation and there was much confusion with regard to the said issue during the relevant period - Being an interpretational issue no penalties can be imposed on the appellant in regard to the amount of Rs. 6, 83, 897/- pertaining to Commercial Coaching and Training Services imparted in India post 18.04.2006 - demand with interest upheld - penalties cannot be levied. Training conducted by the appellant outside India for the period post 18.04.2006 - Rule 3(ii) of the Taxation of Services (provided from outside India and received in India) Rules 2006 - Held that - Though the learned AR has made a frail effort to argue that the training conducted abroad is a continuation of the training conducted by appellants in India he has not been able to support this by any allegation raised in the SCN or by any evidence. In fact in Annexure to the SCN the charges collected by appellant for training imparted in various places abroad as well as in India are separately shown - the service is performed entirely outside India and therefore does not attract the levy of service tax and the demand pertaining to the training conducted outside India to the tune of Rs. 2, 90, 569/- requires to be set aside - demand set aside. Appeal allowed in part.

Summary

Issues:
1. Disallowance of Cenvat Credit on input services
2. Demand of service tax on Commercial Coaching and Training Services

Issue 1: Disallowance of Cenvat Credit on input services

The appellant, a subsidiary of a UK-based bank, availed Cenvat Credit on certain input services, which the Department deemed ineligible. The Original Authority disallowed the credit and ordered recovery, along with interest and penalties. The appellant argued that the disallowance was unjustified, citing the broad definition of "input services" before 01.04.2011. The Tribunal found the disallowance unjustified and set it aside, as the input services had a clear nexus with the output services provided by the appellant.

Issue 2: Demand of service tax on Commercial Coaching and Training Services

The Department demanded service tax on Commercial Coaching and Training Services provided by the appellant in India and abroad. The appellant contested the demand for services performed abroad before 18.04.2006, citing legal precedents. The Tribunal upheld the demand for services conducted in India post 18.04.2006 but set aside the demand for services performed outside India. It ruled that the service tax liability for services abroad only applies from 18.04.2006 onwards. The penalty for the services provided in India post 18.04.2006 was waived due to interpretational issues and early payment. The Tribunal modified the impugned order, allowing credit on input services, upholding the demand for services in India post 18.04.2006, and setting aside the demand for services conducted outside India.

This comprehensive analysis of the legal judgment highlights the key issues, arguments presented by both parties, legal precedents cited, and the Tribunal's final decision on each issue.