2014 (1) TMI 253 - AT - Service Tax

Availment of CENVAT Credit - reversal of CENVAT Credit - Whether assessee is eligible for CENVAT Credit when they were not required to pay Service Tax - Held that - during the relevant time, Revenue was of the view that Service Tax was to be paid. There was no dispute that the impugned services were input services and then in such circumstances, the credit taken under Cenvat Credit Rules cannot be disputed for the reason that later it was decided that the appellant need not have paid the Service Tax. Therefore, I am of the view that the Cenvat credit taken by the appellant is proper and demand for reversing such Cenvat credit is not maintainable - Decided in favour of assessee.

Summary

Issues:
1. Liability to pay Service Tax on services received prior to 18-4-2006.
2. Discharge of Service Tax liability through Cenvat credit.
3. Eligibility to take credit of Service Tax paid by debiting cenvat account.

Analysis:
1. The appellant, a manufacturer of excisable goods, availed the services of an agent located abroad and paid Service Tax on the services received. The main issue was whether Service Tax was required to be paid on services received before 18-4-2006 when Section 66A was introduced in the Finance Act, 1994. The Tribunal noted that the first issue was settled in a previous case and held that the appellant was not required to pay Service Tax on the impugned services.

2. The second issue revolved around the discharge of Service Tax liability through Cenvat credit. The Tribunal referred to a previous decision and concluded that the appellant was entitled to take Cenvat credit on the tax paid for input services. It was established that the credit taken under Cenvat Credit Rules could not be disputed merely because it was later decided that the appellant need not have paid the Service Tax.

3. The final issue concerned the appellant's eligibility to take credit of Service Tax paid by debiting the cenvat account. The Commissioner (Appeals) had held that since the appellant was not required to pay Service Tax, they could not have taken credit for the tax paid. However, the Tribunal disagreed with this finding, emphasizing that the credit taken by the appellant was proper based on the circumstances prevailing during the relevant time. The Tribunal allowed the appeal, stating that the demand for reversing the Cenvat credit was not maintainable.

In conclusion, the Tribunal found in favor of the appellant, allowing the appeal and disposing of the stay petition and appeal. The judgment clarified the issues related to Service Tax liability, Cenvat credit, and the eligibility to take credit of Service Tax paid, providing a comprehensive analysis and resolution of the legal matters at hand.