2019 (7) TMI 58 - HC - Service Tax

Utilization of CENVAT Credit for payment of service under reverse charge mechanism (RCM) - section 66A of the Finance Act 1994 - Rule 3(4) of the Cenvat Credit Rules, 2004 - HELD THAT - The only distinction which Mr. Dwivedi, for the Revenue seeks to make in respect of the above decisions is that the above cases were concerned with discharge of service tax liability on reverse charge basis in respect of GTA service. In this case, it is discharge of tax liability on services received from foreign bank. In this case also, the respondent discharge the tax liability on reverse charge basis under section 66A of the Finance Act, 1994. Thus, this distinction sought to be made out is not a distinction to hold otherwise in the present facts. Appeal not entertained and is dismissed.

Summary

Issues:
1. Eligibility of the assessee to utilize Cenvat Credit for service tax payment under section 66A of the Finance Act.
2. Whether the CESTAT erred in relying on previous decisions regarding service tax liability.

Issue 1:
The main issue in this case is whether the respondent can discharge its service tax liability on a reverse charge basis under section 66A of the Finance Act by using Cenvat Credit available on duty paid for capital goods purchased. The Tribunal's order dismissed the Revenue Appeal by referring to Rule 3(4) of the Cenvat Credit Rules, 2004, which allows the utilization of Cenvat Credit for service tax payment. Additionally, various decisions, including those in the cases of HDFC Standard Life Insurance Co. Ltd. and Aquapharma Chemicals Private Limited, were relied upon to support this position.

Issue 2:
The appellant raised questions regarding the reliance placed by CESTAT on previous decisions related to service tax liability. The appellant argued that the decisions in cases such as HDFC Standard Life Insurance Co. Ltd. and Aquapharma Chemicals Private Limited have already been accepted by the Revenue and not challenged in court. Furthermore, the appellant attempted to distinguish the present case from previous decisions based on the nature of the services involved, but the court held that this distinction was not substantial enough to warrant a different outcome. The court concluded that the issue had been settled by decisions of various High Courts, including the Gujarat High Court, Punjab and Haryana High Court, and Delhi High Court, and therefore, the questions raised did not give rise to any substantial question of law.

In conclusion, the appeal was dismissed based on the precedent set by previous decisions and the acceptance of similar cases by the Revenue, thereby affirming the respondent's eligibility to utilize Cenvat Credit for service tax payment under section 66A of the Finance Act.