2017 (4) TMI 699 - AT - Service Tax

CENVAT credit - duty paying invoices - the service provider did not remit the service tax collected from the appellant to the Central Government - Held that - the service provider has not paid the said amount collected to the account of revenue. This definitely cannot be a ground to deny the credit to the appellant who has paid service tax and produced the invoices/hand written bills. Though it is stated in the impugned order that the hand written bills do not contain essential details, it is not stated as to what are the essential details in terms of Rule 4(A) of STR, 1994 that is required to make the invoices in order - appeal allowed - decided in favor of appellant.

Summary

Issues: Disallowance of credit of service tax paid on inputs services due to hand written bills and non-remittance of tax by service provider.

Analysis:
1. The appeal challenged the disallowance of credit of service tax paid on inputs services due to hand written bills not containing all required details and non-remittance of tax by the service provider.

2. The Original Authority allowed credit of a certain amount but disallowed a portion stating lack of necessary particulars in the invoices. The Commissioner (Appeals) upheld the disallowance due to lack of evidence of payment by the appellant.

3. The appellant argued that the show cause notice did not specify the deficiencies in the hand written bills, and credit cannot be denied solely based on bills being hand written or non-remittance by the service provider.

4. The respondent defended the disallowance, stating that the adjudicating authority allowed credit for the amount where tax was remitted to the Central Government, and the hand written bills lacked essential details justifying the disallowance.

5. The Tribunal noted that the service provider had indeed paid a substantial amount to the Central Government, and both lower authorities allowed credit for this despite the hand written nature of the invoices. The disallowance was solely based on non-remittance by the service provider, which was not a valid ground to deny credit to the appellant who paid the tax and provided invoices.

6. As the invoices' alleged deficiency was not specified, and no clear explanation was provided regarding essential details required by the Service Tax Rules, the disallowance lacked legal grounds. Consequently, the demand in the impugned order was deemed unjustified, leading to the order being set aside and the appeal allowed with any consequential reliefs.