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2018 (10) TMI 621 - AT - Central ExciseCENVAT credit - Man Power Supply Service - Reverse Charge Mechanism - N/N. 13/2012-ST dated 20.06.2012 - Case of the department is that the appellant being a proprietorship concern was not liable to pay service Tax under Reverse Charge Mechanism; therefore, the Service Tax also paid by them is not available as Cenvat Credit to the appellant - Held that - There is no dispute that the Service Tax on Supply of Man Power was payable by the service provider, therefore, levy of Service Tax on supply of Man Power is not under dispute the said liability of the Service Tax even though discharged by the appellant it will not effect to the characteristics of the levy of service Tax which is legally payable on service of supply of Man Power. Moreover, even in case where the service itself is not taxable but if the service provider discharge the Service Tax, the same can be availed as Cenvat Credit by Service recipient. The only condition is that service recipient should receive the services which duly Service Tax paid, if that is so Cenvat Credit cannot be denied to the service recipient - the present case is on better footing as the Service Tax on Man Power Supply per say was taxable, therefore, Service Tax paid on such services irrespective by Service recipient, Cenvat Credit is admissible - credit allowed - appeal allowed - decided in favor of appellant.
Issues:
1. Whether the appellant, as a recipient of Man Power Supply Service, was liable to pay Service Tax under Reverse Charge Mechanism. 2. Whether the Cenvat Credit of Service Tax paid on Reverse Charge Mechanism was admissible to the appellant. Analysis: Issue 1: The appellant, a manufacturer of excisable goods, received Man Power Supply Service and paid Service Tax under Reverse Charge Mechanism. The department contended that the appellant, as a proprietorship concern, was not liable to pay Service Tax under Reverse Charge Mechanism, thus the Service Tax paid was not available as Cenvat Credit. The Tribunal found that the liability of Service Tax on the supply of Man Power was not in dispute, even though the appellant was not the one liable to pay it. The Tribunal emphasized that if the service provider pays the Service Tax, the recipient can avail Cenvat Credit, as long as the services received have had Service Tax paid on them. Therefore, in this case, since the Service Tax on Man Power Supply was taxable, the Service Tax paid by the appellant was admissible for Cenvat Credit. Issue 2: The Tribunal referred to a previous order where a similar issue was considered, and it was held that the credit of 75% of Service Tax paid by the Service recipient was admissible. Following the same reasoning, the Tribunal set aside the impugned order and allowed the appeal, stating that the Service Tax paid by the appellant on Man Power Supply Service under Reverse Charge Mechanism was eligible for Cenvat Credit. The Tribunal highlighted the principle that if the service provider pays the Service Tax, the recipient can claim the Cenvat Credit, regardless of the recipient's liability to pay the tax. The Tribunal's decision was based on the understanding that as long as the Service Tax was paid on the services received, the recipient is entitled to avail the Cenvat Credit. In conclusion, the Tribunal ruled in favor of the appellant, allowing them to claim Cenvat Credit for the Service Tax paid on Man Power Supply Service under Reverse Charge Mechanism, emphasizing that the payment of Service Tax by the service provider enables the recipient to avail the credit, irrespective of the recipient's liability to pay the tax.
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