2017 (1) TMI 305 - AT - Service Tax

CENVAT credit on unregistered premises - reverse charge mechanism - denial on the ground that tax paid as recipient of service was wrongly availed - Held that - On the tax paid on reverse charge on behalf of the provider of service, CENVAT Credit Rules, 2004 does provide for availment of credit against tax paid documents. As the tax has been discharged on reverse charge mechanism, the identity of provider of service is irrelevant - credit allowed - appeal allowed - decided in favor of assessee.

Summary

Issues:
1. Disallowance of CENVAT credit and recovery with interest.
2. Alleged incorrect availing of credit for unregistered premises and tax paid as recipient of service.
3. Imposition of penalties under sections 77 and 78 of Finance Act, 1994.
4. Demand dropped as unsustainable in law.

Analysis:
1. The appellant, M/s Dow Chemical International Pvt Ltd, appealed against an order disallowing CENVAT credit of &8377; 34,01,192/- and imposing penalties under sections 77 and 78 of the Finance Act, 1994. The Commissioner of Service Tax - VII, Mumbai had recovered the disallowed credit along with interest. However, a demand of &8377; 12,55,18,472/- was dropped as unsustainable in law.

2. The allegation included the incorrect availment of credit amounting to &8377; 16,23,623/- for unregistered premises and &8377; 17,77,564/- of tax paid as a recipient of service. The appellant contested this allegation during the appeal.

3. During the hearing, the appellant's Chartered Accountant referred to a decision of the Hon'ble High Court of Karnataka in a similar case to argue that registration of premises was not a prerequisite for availing credit. The appellant also cited a Tribunal decision to support their case.

4. The appellant highlighted that the CENVAT Credit Rules, 2004 allow for the availment of credit against tax paid documents, even in cases of tax paid on a 'reverse charge' basis. The appellant argued that the identity of the service provider is irrelevant in such cases.

5. Ultimately, the Tribunal set aside the impugned order disallowing the CENVAT credit and penalties, allowing the appeal based on the arguments presented by the appellant's representative. The decision was pronounced in court, overturning the earlier order.