2018 (10) TMI 319 - HC - Service Tax

CENVAT Credit - output service not provided - Whether the service tax paid on inputs such as electricity transmission structure etc., could be utilized to pay service tax on output service, when the Assessee had not provided any output service? Held that - It is an undisputed fact that the Respondent herein, was granted registration by the Appellant to pay service tax on the broadcasting services being provided by it. Respondent had admittedly discharged the tax on the output services through their office in India - If the contention of the Appellant-Revenue is to be accepted, then the payment made on output service is not payment of service tax, then in such a case, the credit taken stands reversed by payment made on output service. The question of law, as proposed, does not give rise in the present facts to any substantial question of law. Thus, not entertained. Appeal dismissed.

Summary

Issues:
1. Challenge to order under Section 35G of the Central Excise Act, 1944.
2. Utilization of service tax paid on inputs for output service.
3. Denial of Cenvat Credit due to lack of output service provision.
4. Identity of entities involved in service provision.
5. Interpretation of Cenvat Credit Rules 2004.
6. Application of decision in Infosys Technologies Ltd. case.
7. Distinction between refund and demand cases for Cenvat Credit.

Analysis:
1. The appeal challenges a Customs, Excise and Service Tax Appellate Tribunal order under Section 35G of the Central Excise Act, 1944, focusing on the utilization of service tax paid on inputs for output service provision.
2. The main issue revolves around the denial of Cenvat Credit to the Respondent due to the Revenue's belief that no output service was provided in India during a specific period.
3. The case highlights a discrepancy regarding the entities involved in service provision, with the Tribunal clarifying that there is only one entity, the Respondent, located in Singapore with an office in India.
4. The interpretation of the Cenvat Credit Rules 2004 is crucial, as the Respondent availed Cenvat Credit for inputs services used in providing broadcasting services, leading to a dispute with the Revenue.
5. The Tribunal's decision relied on a previous case involving Infosys Technologies Ltd., emphasizing the importance of compliance with the Finance Act, 1994 and Service Tax Rules, 1994 for Cenvat Credit eligibility.
6. The distinction between refund and demand cases for Cenvat Credit was raised by the Revenue but deemed inconsequential by the Court, emphasizing the core issue of entitlement to Cenvat Credit on inputs services despite tax collection on output services.
7. Ultimately, the Court dismissed the appeal, stating that the proposed question of law did not present a substantial issue in the context of the case, thereby upholding the Tribunal's decision and providing clarity on the matter.