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2018 (4) TMI 617

of Section 66A and Section 68 of the Finance Act 1994, Rule 6 of Service tax Rules 1994 and Rule 3 (4) of CCR 2004 - Held that: - under CCR 2004 there is no bar for utilization of Cenvat credit for the deemed service provider to pay the service tax liability casted upon him in terms of Section 66A - In terms of Rule 2 (r) the Appellant is a deemed service provider - Rule 5 of Taxation of Service Rules (Provided from outside India and Received in India) Rules only refers to availing of Cenvat Credit and not utilization of cenvat credit. - The restriction to utilize the cenvat credit came into Cenvat Credit rules by inserting explanation in rule 3 (4) vide N/N. 28/2012 CE (NT) dt. 20.06.2012 which says that CENVAT credit cannot be used .....

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Rules, 2004 in as much as they have paid the service tax on import of service through Cenvat Credit account which the assessee is not eligible in terms of Rule 5 of Taxation of Services (Provided form Outside India and received in India) Rules, 2006 and therefore it amounts to non-payment of tax. The show cause notices proposed demand of Service tax amounting to ₹ 3,71,03,693/- and ₹ 1,64,13,567/- from the Appellant in terms of proviso to Section 73 (1) & 75 of the Finance Act, 1994 and to impose penalty in terms of Section 76,77 and 78 of the Finance Act, 1994. The adjudicating authority vide impugned order confirmed the demand. Hence the present appeal. 2. Shri M.P. Baxi, ld. Advocate appearing for the Appellant submits t .....

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e recipient is not applicable as it is not present in the case as it is contrary to the Act and the rules. He also submits that the whole case is revenue neutral as whatever service tax is being paid by them is available as credit to them. He relies upon the Tribunal order in case of Kansara modler Ltd. 2013 (32) STR 209 (TRI), Tata AIG Life Insurance Co. Ltd & Othrs. 2013 (32) STR 209 (TRI) and Aksh Technologies Ltd. 2012 (42) taxmann.com (396) in this regard. That the demands are hit by time bar as they have been filing service tax returns showing the payment of taxes from cenvat account. Further that the show cause notice was issued after 2 years of the audit by the revenue. He submits that since there is no suppression, the penalty .....

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dit rules by inserting explanation in rule 3 (4) vide Notification No. 28/2012 - CE (NT) dt. 20.06.2012 which reads as under : Explanation. - CENVAT credit cannot be used for payment of service tax in respect of services where the person liable to pay tax is the service recipient 5. We thus find that before 20.06.2012 there was no restriction upon the deemed service provider to pay the service tax liability from cenvat credit. The Tribunal in the case of M/s Kansara Modler Ltd. 2013 (32) STR 209 (TRI) has allowed the utilization of credit. The relevant portion of the order is as under : 4. We find in this case contention of Revenue is that appellant is a recipient of services and cannot be treated as provider of output service. Hence appell .....

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y becomes output service provider under Rule 2(p) of the Cenvat Credit Rules. Revenue is also relying on Rule 5 of Taxation of Services (Provided from Outside India and Received in India) Rules. We find that Rule 5 refers to availing of Cenvat credit and not to utilization of credit. We are therefore of the view that the finding of the Commissioner not treating the appellant as output service provider, is not correct and accordingly we set aside the impugned order and allow the appeal. In the instant case the period of dispute is prior to 20/06/2012 and the above judgment of the Tribunal is applicable to the facts of the case. We thus hold that the impugned order is not sustainable. hence we set aside the same. The appeal is allowed with co .....

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