9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (2) TMI 99 - AT - Service TaxUtilisation of Cenvat credit for payment under Reverse charge - demand was confirmed on the ground that the appellants had not paid the service tax in cash on Business Auxiliary Service (BAS) received from commission agents appointed abroad under reverse charge mechanism (but paid the same from CENVAT credit which was not permissible) - Held that - The contentions of Departmental Representative that the ratio of various judgements of the High Courts referred 2013 (8) TMI 215 - MADRAS HIGH COURT and 2014 (5) TMI 461 - Karnataka High Court holding that the service tax under GTA services can be paid out of CENVAT credit under reverse charge mechanism does not hold for payment under reverse charge mechanism in terms of provisions of section 66A ibid requires a detailed analysis. However, having regard to the fact that the decision of the Tribunal in the case of Indian Acrylic Ltd. (2013 (1) TMI 460 - CESTAT, NEW DELHI) (involving same issue) that the CENVAT credit can be utilised for paying such service tax and in view of the fact that the situation is revenue neutral in as much as even if the impugned service tax was paid in cash, the same indisputedly was available as CENVAT credit, which in case the same could not be utilised, would prima facie be available for refund in cash, we are of the view that the appellants have made out a good case for complete waiver of pre-deposit and we order accordingly, staying recovery of the impugned liabilities during pendency of the appeal. - Stay granted.
Issues:
1. Appellants challenging service tax demand confirmed under reverse charge mechanism. 2. Appellants seeking to pay service tax from CENVAT credit. 3. Interpretation of relevant legal provisions and precedents. 4. Consideration of revenue neutrality in the case of 100% EOU. Analysis: 1. The appellants filed a Stay Application and Appeal against the Order-in-Appeal confirming a service tax demand under reverse charge mechanism. The demand was based on the appellants not paying service tax in cash on Business Auxiliary Service received from commission agents abroad. The Order-in-Original confirmed the demand along with interest and penalties under the Finance Act, 1994. The appellants contested the demand, citing legal provisions and precedents allowing payment from CENVAT credit in similar cases. 2. The appellants argued that they should be allowed to pay the service tax from their CENVAT credit account, referring to Section 66A of the Act, Section 68(2) of the Act, and relevant rules. They relied on judgments where CENVAT credit was permitted for paying service tax under reverse charge mechanism. They highlighted the revenue neutrality aspect and cited a Tribunal decision supporting their position. 3. The Departmental Representative opposed the appellants' arguments, stating that the precedents allowing CENVAT credit for GTA services under reverse charge mechanism were not directly applicable to the present case. The representative emphasized the differences in the genesis of reverse charge mechanisms. Additionally, the representative mentioned that even if the service tax was paid in cash, the appellants, being a 100% EOU, could claim a refund of the CENVAT credit due to the nature of their exports. 4. After considering both sides' contentions, the Tribunal analyzed the legal provisions and precedents. While acknowledging the Departmental Representative's arguments, the Tribunal found merit in the appellants' case. The Tribunal noted that the situation was revenue neutral, and even if the service tax was paid in cash, it would be available as CENVAT credit for refund. Therefore, the Tribunal granted a complete waiver of pre-deposit and ordered the stay of recovery of the liabilities during the appeal process.
|
