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2017 (5) TMI 570 - AT - Service TaxReverse charge mechanism - payment through CENVAT credit - The period covered in the present appeal is from October 2007 to March 2008 - Held that - An amendment has been brought forth w.e.f. 01.03.2008, barring the use of CENVAT credit for payment of service tax under reverse charge mechanism - the demand for the period prior to 01.03.2008 requires to be set aside. With regard to the demand for the period after 1st March 2008 to the tune of ₹ 23,201/-, Since the appellant is utilising the CENVAT credit for payment of service tax which he is liable to pay under reverse change mechanism, definitely the situation would be revenue neutral one. Extended period of limitation - Held that - The issue whether CENVAT credit can be used for payment of service tax under reverse charge mechanism was under much debate and had travelled upto the Larger Bench - On the said set of facts, there can be no suppression of facts with intent to evade payment of service tax - the demand for the period from 1st March 2008 onwards is also unsustainable. Appeal allowed - decided in favor of appellant.
Issues:
Confirmation of demand based on service tax payment under reverse charge mechanism using CENVAT account. Analysis: The appeal was filed against the confirmation of demand by the authorities alleging that payment of service tax under reverse charge mechanism cannot be made using CENVAT account. The appellant argued that a significant part of the period in question falls before 01.03.2008, when an amendment was introduced prohibiting the use of CENVAT credit for paying service tax under reverse charge mechanism. Referring to the judgment of the Larger Bench in a specific case, it was highlighted that prior to 01.03.2008, the assessee was allowed to utilize CENVAT credit for such payments. The Tribunal's Final Order in a related case also favored the assessee. The appellant contended that even if CENVAT credit was used for service tax payment under reverse charge mechanism, it would be revenue-neutral, and there was no intent to evade tax. On the other hand, the department argued against the appellant's eligibility to use CENVAT credit post-01.03.2008. The presiding Member considered the submissions from both parties. It was noted that the major period in question fell before 01.03.2008, and the issue had been settled by a Larger Bench decision allowing the use of CENVAT credit for service tax under reverse charge mechanism before the amendment. Therefore, the demand for the period prior to 01.03.2008 was set aside. Regarding the demand for the period post-01.03.2008, amounting to ?23,201, the appellant argued that it was a revenue-neutral situation. The Member agreed that there was no suppression of facts to evade tax, especially considering the contentious nature of using CENVAT credit for service tax under reverse charge mechanism before the amendment. Consequently, the demand for the period from 1st March 2008 onwards was deemed unsustainable, and the impugned order was set aside, allowing the appeal with any consequential reliefs. In conclusion, the judgment favored the appellant by setting aside the demand for the period prior to 01.03.2008 and also for the subsequent period post-01.03.2008, emphasizing the revenue-neutral aspect and lack of intent to evade tax.
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