2018 (7) TMI 761 - AT - Service Tax

CENVAT Credit - Manpower supply services - recipient of services - tax was discharged by service provider - The Department was of the view that the appellant is not eligible to avail credit of the entire 100% and also was of the view that they have not discharged the 75% liability to the Government - Held that - It is clear that on some wrong notion the service provider has discharged 100% service tax on which the appellant has availed credit. The very same issue has come up for analysation before the Bench at Ahmedabad and in the case of M/s. Gurudev Dyestuff (India) Pvt. Ltd. 2018 (2) TMI 1399 - CESTAT AHMEDABAD where the Tribunal has held that the appellant would be eligible for entire credit - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Availment of Cenvat Credit on manpower supply services
- Discharge of service tax liability by service provider
- Dispute regarding payment of 75% service tax directly to the Government
- Applicability of credit availed by the appellant

Analysis:
The case involved the appellant availing Cenvat Credit on inputs, capital goods, and input services, including manpower supply services. The Department contended that the appellant, as the service recipient, should have paid 75% of the service tax on manpower supply services directly to the Government. However, the service provider had already paid 100% of the service tax to the Government, leading the appellant to avail 100% credit on the input services. Show Cause Notices were issued to disallow the 100% credit and demand 75% of the tax from the appellant. The original authority and the Commissioner (Appeals) upheld the demand and penalties imposed.

The appellant argued that the service tax was mistakenly paid to the service provider, who then paid 100% to the Government. They contended that the entire service tax had been paid to the Government and that they availed credit based on this payment. The appellant cited precedents to support their case, emphasizing that when the service provider pays the entire service tax, the Revenue cannot demand the same from the service recipient.

Upon hearing both sides, it was established that the service provider had indeed paid the entire service tax on the manpower supply services. The Department's contention was that the appellant should have paid 75% directly to the Government. However, due to a misunderstanding, the service provider paid 100%, allowing the appellant to avail credit. The Tribunal referred to previous judgments to support the appellant's eligibility for the entire credit.

The Tribunal concluded that since the service provider had already paid the entire service tax, the Department could not demand the 75% from the appellant. Citing relevant precedents, the Tribunal set aside the impugned orders, allowing the appeals with consequential reliefs.