2022 (10) TMI 1290 - AT - Central Excise

CENVAT Credit - appellant was not liable to pay service tax - challan through which the service tax - valid document for availing the cenvat credit in view of Rule 9 of Cenvat Credit Rules 2004. CENVAT Credit - credit denied on the ground that the appellant was not liable to pay service tax - HELD THAT - There is no specific condition in the Cenvat Credit Rules that the cenvat credit can be allowed only when service tax is paid by the service provider. The fact is not under dispute that the appellant was received the services which was suffered service tax the government exchequer has received the service tax amount. In such case the compliance of the Cenvat Credit Rules stand fulfilled therefore on the ground that the appellant have paid the service tax therefore the credit is not available is absolutely incorrect. CENVAT Credit - challan through which the service tax - valid document for availing the cenvat credit in view of Rule 9 of Cenvat Credit Rules 2004 - HELD THAT - The challan through which the service tax was paid is a valid document for availing the cenvat credit therefore for this reason also the cenvat credit cannot be denied. The department s allegation clearly fails on both the grounds - The impugned order is set aside - Appeal is allowed.

Summary

The Appellate Tribunal (CESTAT Ahmedabad) addressed the denial of cenvat credit to the appellant who, as a service recipient, paid service tax under the reverse charge mechanism-though the statutory liability was on the service provider. The department contended that (i) cenvat credit is not available since the appellant was not liable to pay service tax, and (ii) the bank challan used for payment is not a valid document under Rule 9 of the Cenvat Credit Rules, 2004. The Tribunal, relying on multiple precedents cited by the appellant, held that "there is no specific condition in the Cenvat Credit Rules that the cenvat credit can be allowed only when service tax is paid by the service provider." It emphasized that since the appellant received the services and the government exchequer received the service tax, "the compliance of the Cenvat Credit Rules stand fulfilled." Further, the Tribunal rejected the department's challenge to the validity of the challan, noting that this issue "is no longer res-integra" and that "the challan through which the service tax was paid is a valid document for availing the cenvat credit." Accordingly, the Tribunal concluded that the appellant "have rightly availed the cenvat credit in respect of service tax paid by them on receipt and use of service," set aside the impugned order, and allowed the appeal.