2011 (10) TMI 74 - AT - Service Tax

Cenvat Credit - import of services - Cenvat Credit Rules has been amended retrospectively and appellant is entitled for input service credit on the service tax leviable under section 66A of the Finance Act also. - Held that - while issuing show cause notice and passing the order by both Lower Authorities, the amendment made through Finance Act 2011 was not available with them and the appellant s case is squarely covered by the amendment of the Finance Act in Rule 3 (1) (ix) of the Cenvat Credit Rules - impugned order deserves no merit - Decided in favor of assessee.

Summary

Issues:
Denial of input service credit on service tax paid by the appellant as input service recipient from Foreign Service provider after 18.04.2006.

Analysis:
The appellant appealed against the impugned order denying input service credit on service tax paid by them to their Foreign Service provider after 18.04.2006. The issue revolved around the interpretation of rule 3(1)(ix) of the Cenvat Credit Rules, 2004, which allowed credit on service tax paid under section 66 of the Finance Act 1994. The appellant contended that the retrospective amendment through the Finance Act 2011 entitled them to claim input service credit on service tax leviable under section 66A of the Finance Act as well. It was argued that since the appellant had taken credit on services received post the amendment date, the impugned order should be set aside.

The Ld. Advocate for the appellant highlighted the retrospective amendment in Rule 3 of the Cenvat Credit Rules through the Finance Act 2011, which expanded the scope of input service credit to cover service tax leviable under section 66A of the Finance Act. The appellant's position was supported by the fact that they had availed the services post the effective date of the retrospective amendment. It was emphasized that the impugned order lacked merit as the authorities were unaware of the amendment at the time of issuing the show cause notice and passing the order. The appellant's case fell squarely within the ambit of the amended Rule 3(1)(ix) of the Cenvat Credit Rules.

Given the narrow compass of the issue and the mutual agreement for final disposal post waiver of pre-deposit, the appeal was taken up for consideration. The Tribunal noted the retrospective amendment in Rule 3 of the Cenvat Credit Rules through the Finance Act 2011, which validated the appellant's claim for input service credit on service tax paid under section 66A of the Finance Act. The Tribunal found that the impugned order had no merit in light of the retrospective amendment and, therefore, set it aside. Consequently, the appeal was allowed, and the stay application was disposed of accordingly.