2016 (6) TMI 875 - AT - Service Tax

Cenvat Credit - Denial of credit of excess Service Tax was paid by the input service provider - The construction companies instead of paying service tax on 33% of the gross value, paid service tax on 67% of the value of the service provided to the appellant - Held that - as per Rule3 of the Cenvat Credit Rules, 2004, an assessee entitled to avail cenvet credit of the service tax paid by them. As the payment of service tax is not in disputed, in that circumstances, the cenvat credit cannot be denied to the appellant on account of excess service tax paid by the service provider - Decided in favor of assessee.

Issues: Denial of cenvat credit on construction services due to excess service tax paid by the construction companies.

In this case, the appellant appealed against an order denying cenvat credit on construction services. The appellant had availed services from construction companies and claimed cenvat credit on the service tax paid by the construction companies. It was discovered during an audit that the construction companies had paid service tax on 67% of the value of the service provided instead of the required 33% as per a specific notification. The revenue argued that the excess service tax paid by the construction companies should not be eligible for cenvat credit by the appellant. Both parties were heard, and it was acknowledged that the construction company had indeed paid service tax on 67% of the service value. The tribunal referred to Rule 3 of the Cenvat Credit Rules, 2004, which allows an assessee to avail cenvat credit of the service tax paid by them. Since the payment of service tax was not in dispute, the tribunal ruled that the appellant could not be denied cenvat credit due to the excess service tax paid by the service provider. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief.

This judgment primarily deals with the entitlement of cenvat credit on construction services when the service provider has paid excess service tax. The tribunal clarified that as long as the service tax payment is not in dispute, the appellant should not be deprived of cenvat credit based on the excess amount paid by the service provider. The decision was based on a strict interpretation of the Cenvat Credit Rules, emphasizing the right of an assessee to avail credit for service tax paid. The tribunal's analysis focused on the specific provisions of the law and the facts of the case regarding the service tax payment by the construction companies. By upholding the appellant's right to cenvat credit, the tribunal ensured compliance with the legal framework governing such credits and prevented unjust denial based on the actions of the service provider.

The judgment underscores the importance of adherence to statutory provisions and notifications governing service tax payments and cenvat credit eligibility. It highlights the significance of clear and undisputed documentation regarding service tax payments by service providers to determine the entitlement of cenvat credit for the recipient. The tribunal's decision serves as a reminder of the need for accuracy and compliance in tax-related matters, especially concerning credits and payments within the framework of the Cenvat Credit Rules. By emphasizing the non-disputed nature of the service tax payment and its direct impact on cenvat credit availability, the judgment establishes a precedent for ensuring fair treatment and adherence to legal requirements in similar cases involving tax credits on services.

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