2018 (10) TMI 87 - AT - Service Tax

Utilization of CENVAT Credit for payment of Service Tax by service recipient - Reverse Charge Mechanism - period of dispute is from October' 2008 to September' 2009 - Held that:- Tribunal, in the case of the appellant itself, MORARJEE TEXTILES LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, NAGPUR [2015 (2) TMI 755 - CESTAT MUMBAI], on identical set of facts, by analyzing the provisions of Rule 2(r), 2(p) and 2(q) of the Cenvat Credit Rules, 2004 read with the provisions of Rule 2(1)(d)(iv) of the Service Tax Rules, 1994 has held that since the person is liable to pay service tax as a recipient of taxable service, it is erroneous in not considering him as the service provider for the purpose of utilization of Cenvat credit for payment of service tax under reverse charge mechanism.

Under the un-amended provisions of sub-rule (4) of Rule 3 of the Cenvat Credit Rules, 2004 (effective up to 30.06.2012), there were no specific restrictions imposed for utilization of credit for discharging the liability under reverse charge mechanism by the recipient of service. Such restriction was brought w.e.f. 01.07.2012, by amending the provisions of the said rule - In the present case, since the period of dispute is from October' 2008 to September' 2009, the case of the appellant will be governed under the provisions of un-amended Rule 3(4) ibid and in absence of specific restrictions contained therein for non-utilisation of Cenvat credit by the service recipient, the benefit of the existence rule should be available for utilization of Cenvat credit for payment of service tax under reverse charge mechanism.

Appeal allowed - decided in favor of appellant.