TMI Blog2013 (6) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... . No Service Tax is payable on that part of the payment which is not received. No Service Tax is payable on that part of the payment which is not received. There is no provision in the CENVAT Credit rules to deny proportional credit on the inputs which were used in providing the output service on which recovery is pending. The rule envisages reversal of credit wrongly utilized or erroneously refunded. In this case, the services rendered are taxable services. The credit of inputs/input services availed is utilized in providing taxable output services. Hence, there is nothing wrong in availing and utilization of the credit. Rule 14 does not envisage recovery of credit in situations where Service Tax recovery was pending and written off as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s realized on the output service in which such input service has been used. The CENVAT Credit scheme envisages availment of credit towards payment of Service Tax on output services. Where no Service Tax is payable on any output service either because such service itself is exempt or because the service charges billed for in respect of such services becomes irrecoverable, the Service Tax credit was not available to the appellants and the credit cannot be used as set off against output service in such cases. In view of the above, the CENVAT Credit to be reversed by the appellants was calculated to be ₹ 1,45,808/- and the appellants, vide letter dt.12.11.2009, were requested to pay up the said amount. 4. A show cause notice dt.27.01.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received the amount from the recipient of the services and having written off the same as bad debt, did not discharge the Service Tax liability, as per the provisions of Service Tax entitled them not to discharge the Service Tax for the amount which was not received. It is also his submission that the CENVAT Credit Rules were framed in order to reduce the cascading effect of tax and in this case having not paid the Service Tax liability, they are required to reverse the CENVAT Credit of the input services which is proportionate to the amount which has been written off by the respondent as not received from the recipient of the services. 8. Ld. Chartered Accountant submits that availment of input service credit is not in dispute. It is hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice. I find that the first appellate authority while appreciating the law, had recorded the following:- 8. I find that the show cause notice has been issued to deny proportional CENVAT Credit on the ground that certain amount has been shown as bad debts in the books of accounts of the appellants and the adjudicating authority has also confirmed the demand made in the show cause notice. As per Rule 6(10) of Service Tax Rules, 1994, Service Tax shall be paid to the credit of the Central Government on prescribed due date in which the payment are received towards the value of taxable services. Further, amounts billed by the service provider against customer but not realized are not liable to Service Tax as the event of payment of Service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax is payable on that part of the payment which is not received. No Service Tax is payable on that part of the payment which is not received. There is no provision in the CENVAT Credit rules to deny proportional credit on the inputs which were used in providing the output service on which recovery is pending. The adjudicating authority has cited Rule 14 of CENVAT Credit Rules and held that when Service Tax was not realized, the output service has not suffered any Service Tax. Hence, the credit availed would fall under the category of wrongly utilized credit and Rule 14 of CENVAT Credit Rules would be applicable in this case. Accordingly, he confirmed the reversal of CENVAT Credit under Rule 14 of the CENVAT Credit Rules, 2004. For the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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