2015 (3) TMI 1241 - AT - Service Tax

Payment of service tax under reverse charge method through cenvat credit instead of cash - commission paid to the overseas agents - Held that - We find that in the appellant/assessee s own case 2011 (8) TMI 265 - CESTAT NEW DELHI it was held that for the period prior to Notification No. 10/2008-CE (NT) the question whether Cenvat credit can be utilised for payment of service tax on GTA stands settled in favour of the assessee by various decisions of the Tribunal and there was no restriction for utilisation of Cenvat credit by manufacturing unit towards payment of service tax on GTA as output service provider. In the case of Kansara Modler Ltd. Vs. CCE Jaipur-II 2014 (1) TMI 1095 - CESTAT NEW DELHI it was held that Cenvat credit can be utilised for payment service tax payable under reverse charge mechanism in respect of service received from abroad. Similarly Karnataka High Court in the case of CST Bangalore Vs. Aravind Fashions Ltd. 2011 (9) TMI 852 - KARNATAKA HIGH COURT held that though assessee was recipient of Intellectual Property Service from abroad they were deemed to be provider of service liable to pay service tax and therefore such service tax can be discharged by using Cenvat credit. The demand confirmed against the appellant/assessee do not survive. In such a situation the Revenue s appeal contesting the cum tax benefit becomes infructuous - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether service tax demands related to commission payments to overseas agents can be paid using Cenvat credit.
2. Whether the entire amount of commission paid should be considered as the assessable value of service received.
3. Whether the cum tax benefit should be extended to the appellant-assessee.

Analysis:
1. The appellant filed appeals against the Order-in-Appeal confirming service tax demands on commission payments, stating that the tax can be paid from Cenvat credit. The Commissioner (Appeals) upheld the demands but allowed the cum tax benefit. The appellant argued that previous judgments favored using Cenvat credit for service tax payment.

2. The Revenue appealed the Order-in-Appeal, claiming that the entire commission amount should be the assessable value of the service received and opposed extending the cum tax benefit to the appellant. The Tribunal referred to past decisions, including the appellant's case and other rulings, where Cenvat credit was allowed for service tax payments, even under reverse charge mechanisms, and for services received from abroad.

3. Citing the precedents, the Tribunal found in favor of the appellant, stating that the demands against them were not valid. Consequently, the Revenue's appeal regarding the cum tax benefit was deemed irrelevant. As a result, the appellant's appeals were allowed, and the Revenue's appeals were dismissed.