2014 (8) TMI 343 - AT - Service Tax

Denial of CENVAT Credit - credit on the basis of Invoice whereas service provider as paid the service tax belated - Held that - Service providers have deposited service tax with the Revenue, though belatedly. In such a scenario, the technical objection of the invoices raised by the service provider being not in accordance with the provisions of Rule 9 would not survive - It is seen that the invoices were raised on 7.3.2007 and the service tax credit was availed on 31.3.2007 only after making payment to the service provider - In terms of the provision of Rule 4(7) of the Cenvat Credit Rules 2004, the Cenvat credit in respect of input service shall be allowed, on or after the day on which payment is made of the value of input service and the service tax paid or payable as is indicted in the invoice. As such, for the purpose of availing Cenvat credit, there is no requirement that the service tax should have been deposited by the service provider before the availment of the credit. If the service provider has not deposited the service tax with the department on due date, to Revenue s remedy lies at the end of the service provider for recovery of the service tax along with interest - Decided in favour of assessee.

Summary

Issues:
1. Availment of service tax credit based on invoices issued by service provider.
2. Discrepancy in timing of credit availed and service tax payment by service provider.
3. Compliance with Cenvat Credit Rules 2004 regarding documentation for credit availment.
4. Interpretation of Rule 4(7) of Cenvat Credit Rules 2004 for allowing credit based on payment date.

Analysis:
1. The dispute in the appeal concerns the appellant availing service tax credit of Rs. 2,10,138 based on invoices from the service provider. The Revenue contends that the credit was claimed in March 2007, while the service provider paid the service tax in April and May 2007.

2. The Commissioner (Appeals) highlighted that the invoices lacked essential details required by Rule 4A of Service Tax Rules 1994 and Rule 9(1) of Cenvat Credit Rules 2004. The Commissioner noted that the appellant took credit before the service tax was deposited by the providers, deeming it inadmissible.

3. The judgment emphasized that the service providers eventually paid the service tax, rendering the technical objection regarding invoice compliance irrelevant. The key issue was whether the appellant could claim credit upon paying for services and service tax to the provider. The invoices were dated 7.3.2007, and credit was availed on 31.3.2007 post-payment.

4. Rule 4(7) of Cenvat Credit Rules 2004 stipulates that credit for input service can be allowed upon payment of the service value and tax as per the invoice. It clarified that the service tax payment by the provider before credit availment is not a prerequisite. The responsibility for recovering unpaid service tax lies with the service provider, not the credit claimant.

5. Consequently, the judgment overturned the impugned order, granting the appeal in favor of the appellant. The decision highlighted the adherence to Rule 4(7) for allowing credit based on payment dates, providing consequential relief to the appellant. The ruling was pronounced on 23.4.2014.