TMI Blog2013 (8) TMI 497X X X X Extracts X X X X X X X X Extracts X X X X ..... vided, the service recipient takes the Cenvat credit, even though the service provider has not paid the service tax for the reason that for some reasons, there is delay in receipt of payment by him from the service recipient. Rule 4 (7) would be applicable only in a situation where though the service provider has issued the invoice, but he has not paid the service tax. But where there is no dispute that service tax has been paid by the service provider on the full invoice value, even though he has not received full payment from the service recipient and part of the payment due to him has been withheld by the service recipient due to some reason, this rule would not be applicable. Moreover, it is also not the department’s case that the amount withheld was never paid or that the service providers subsequently sought and obtained refund of the service tax amount not reimbursed to them by the respondent. When the service tax paid by the service provider has not varied, the Cenvat credit also cannot be reduced. - Full claim of credit allowed - Decided in favor of assessee. - Appeal No. 992 of 2011 (SM) - Final Order No. A/56583/2013-SM(BR)(PB) - Dated:- 15-5-2013 - Mr. Rakes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- on the respondent. In course of proceedings before the Assistant Commissioner, the respondent pleaded that the service providers have paid service tax to the Government on the total billed amount receivable by them as mentioned in the invoices, notwithstanding the fact that they were not entitled to receive the said amount hundred percent and the retained amount was to be received later on, and on this basis they had pleaded that since the service tax has been paid by the service providers on the full invoice value including the amount not received by them, they (respondent) may be allowed its Cenvat credit. However, this plea was not accepted by the Assistant Commissioner observing that even if the entire input service is received and the service tax on the entire value of service is paid by the service provider, the service tax credit to the extent which is proportionate to the value of the service not paid by the assessee is clearly not admissible in terms of Rule 4 (7) of the Cenvat Credit Rules. 1.2 The respondent filed an appeal to the Commissioner (Appeals) against this order of the Assistant Commissioner. The Commissioner (Appeals) vide impugned order-in-appeal dated 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of the service has been paid by the service provider, service tax credit would be available only to the extent which is proportionate to the value of the service, paid by the assessee and the Cenvat credit would not be admissible to the extent the amount representing the value of the service was not paid to the service providers, that this stand of the department is contrary to the Board s Circular No. 122/3/2010-ST dated 30/4/10, wherein the Board, in respect of such cases, where a part of the amount is withheld as security or performance guarantee, has clarified that the Cenvat credit is to be allowed if the service provider had paid service tax on the full amount receivable, that there is nothing in the Circular which is contrary to the provisions of the law, that in any case, the balance amount was subsequently paid by the respondent to the service providers and at that stage, the full amount of credit would become available, and that in view of this, there is no merit in the Revenue s appeal. 5. I have considered the submissions from both the sides and perused the records. 6. The stand of the respondent is that the service providers had paid service tax on the entire in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned issues is as under , - (a) When the substantive law i.e. Section 67 of the Finance Act, 1994 treats such book adjustments etc., as deemed payment, there is no reason for denying such extended meaning to the word payment for availment of credit. As far as the provisions of Rule 4 (7) are concerned, it only provides that the Cenvat credit shall be allowed, on or after the date on which payment is made of the value of the input service and of service tax. The form of payment is not indicated in the same and the rule does not place restriction on payment through debit in the books of accounts. Therefore, if the service charges as well as the service tax have been paid in any prescribed manner which is entitled to be called gross amount charged then credit should be allowed under said Rule 4 (7). Thus, in the case of Associate Enterprises, credit of service tax can be availed of when the payment has been made to the service provider in terms of Section 67 (4) (c) of Finance Act, 1994 and the service tax has been paid to the Government Account. (b) In the cases where the receiver of service reduces the amount mentioned in the invoice/bill/challan and makes discounted pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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