2007 (2) TMI 6 - AT - Service Tax

Cenvat - Input Service tax credit - Credit deniable when input and output service when not fall within same sub-clause of Clause(90) of Section65, of F.A.1994 - After considering all the details, denial of credit upheld

Summary

Issues: Denial of service tax credit based on different sub-clauses of Section 65(90) of the Finance Act, 1994.

In this judgment by the Appellate Tribunal CESTAT, Mumbai, the issue revolved around the denial of service tax credit amounting to Rs. 74,609/- to the appellants. The denial was based on the argument that the input service (service tax paid by service providers of Steamer Agent services) and the output service (service tax on Cargo Handling) did not fall within the same sub-clause of clause (90) of Section 65 of the Finance Act, 1994. The Department relied on Rule 3 of the Service Tax Credit Rules 2002, which allows an output service provider to take credit of the service tax paid on input services falling in the same category of taxable service as the output service. The appellants contended that since there was an overlap between the services provided by the port service provider and the steamer agent, both input and output services should be considered to fall in the same category. However, the deeming provision in Rule 3(2) explicitly states that two services are deemed to be falling in the same category if they fall within the same sub-clause of Section 65(90) of the Act. In this case, Cargo Handling services fell under Section 65(90)(zr) while steamer agent services fell under Section 65(90)(i), demonstrating that the input and output services did not fall within the same sub-clause. Consequently, the Tribunal upheld the denial of credit to the appellants, affirming the impugned order and dismissing the appeal.