2013 (3) TMI 226 - AT - Service Tax

Cenvat Credit - input services - Service tax paid by the sub-contractor - appellant is hiring sub-contractors for doing the basic work at the site for such erection, installation of the DG sets - held that - appellant is availing the services of the sub-contractor for providing an output service on which he is discharging the -Service tax liability under the head Erection, Installation and Commissioning services. - prima facie case is in favor of assessee - stay granted.

Summary

Issues:
1. Waiver of CENVAT Credit, interest, and penalties.
2. Availment of ineligible CENVAT Credit by the appellant.
3. Discharge of Service tax liability by the appellant.
4. Appellant's utilization of sub-contractor services for output services.
5. Dispute over the provider of output services.
6. Prima facie assessment of the appellant's case for waiver of pre-deposit.

Analysis:
The judgment pertains to three Stay Petitions seeking waiver of various amounts involving CENVAT Credit, interest, and penalties. The adjudicating authority confirmed the amounts due, alleging that the appellant availed ineligible CENVAT Credit of Service tax paid by a sub-contractor and used it to discharge Service tax liability. The appellant, a manufacturer of Diesel Generating Sets, also provides erection, installation, and maintenance services through sub-contractors. The appellant takes credit for the Service Tax paid by the sub-contractor and bills the purchaser for the services provided. The Revenue contended that the appellant is not the provider of the output services for which input services were received.

Upon reviewing the records, the Tribunal found that the appellant indeed utilized sub-contractor services to provide output services, specifically in the context of Erection, Installation, and Commissioning services. The Tribunal acknowledged the appellant's case for waiver of pre-deposit, as it appeared that the appellant was discharging Service tax liability for the output services rendered. Consequently, the Tribunal allowed the applications for waiver of pre-deposit, staying the recovery of the amounts until the appeals were disposed of. The judgment highlights the importance of proper utilization of CENVAT Credit and the eligibility of input services in discharging tax liabilities, emphasizing the need for a clear nexus between input and output services to avoid disputes over tax liabilities.