2019 (2) TMI 1021 - AT - Central Excise

Utilization of CENVAT Credit for payment of service tax in respect of services received - reverse charge - Held that - The utilization of Cenvat credit for payment of service tax is correct - If that be so, then the appellant has correctly made the payment of service tax and the same is available as Cenvat credit to them. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Wrong availment of credit of service tax paid in respect of services received from overseas under reverse charge mechanism.

Analysis:
The appellant paid service tax on reverse charge basis for services received from overseas using Cenvat credit. A common order-in-original confirmed the demand of service tax on reverse charge basis, stating that the appellant should not have utilized Cenvat credit for such payments. The same order also denied the Cenvat credit for the amount paid as service tax. Two appeals were filed by the appellant, one related to the payment of service tax using Cenvat credit and the other regarding wrong availment of credit for service tax paid under reverse charge mechanism.

The appellant's advocate argued that a previous Tribunal order had allowed the appeal related to payment of service tax using Cenvat credit, indicating that Cenvat credit should be admissible to them. On the other hand, the Revenue representative relied on judgments in similar cases to support the findings of the impugned order.

The Tribunal considered the submissions and record. Referring to the previous Tribunal order, it was noted that utilizing Cenvat credit for payment of service tax was permissible. The Tribunal also highlighted relevant legal provisions and notifications applicable to the case period. As the amended provisions were not in force during the relevant period, the impugned order was set aside, and the appeal was allowed with consequential relief to the appellant.

The order clarified that since the utilization of Cenvat credit for service tax payment was deemed correct, the appellant was entitled to the Cenvat credit for service tax paid on reverse charge basis. Consequently, the impugned order was modified, and the appeal was allowed.

In conclusion, the Tribunal's decision favored the appellant, allowing the appeal and granting them the Cenvat credit for service tax paid under the reverse charge mechanism.