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TMI Blog2013 (6) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... duly registered with the Department and are holding a valid Service Tax registration No.AADHR2726RST001. 3. During the course of audit conducted by CERA, it was noticed that Service Tax would be paid to the credit of Central Government on prescribed due date in which the payment are received towards the value of taxable services. Further, the amounts billed by the appellants against customers but not realized are not liable to Service Tax as the event of payment of Service Tax is on the basis of actual realization of amounts towards the cost of service. Where the cost of service billed become irrecoverable for any reason and the same is written off fully in the in the books of accounts of the assessee, the element of input service credit a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the appeal memoranda as well as during the personal hearing, held in favour of the assessee and set aside the Order-in-Original. 6. Revenue, aggrieved by such an order, is in appeal before the Tribunal. 7. Ld. Additional Commissioner (A.R.), submits that the appellant had availed the CENVAT Credit of input services on which Service Tax liability was paid and it was not utilized for providing the output services. It is his submission that the said output services were rendered to the recipient of the services by the respondent. It is his submission that some of the recipient of the services from the respondent did not pay the amount to the respondent and hence the respondent has written off the amount due from such recipients of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice Tax liability on the amount which has been written off by them, as per the provisions of Service Tax Rules. From the records, it is seen that there is no dispute as to the eligibility of availment of CENVAT Credit of the Service Tax paid, by the service provider. It is also not in dispute that such services were received by the appellant and were utilized for providing output service. It is also to be noted that there is no dispute as to the discharge of Service Tax liability by the service provider to the respondent. 10. I find that the grounds of appeal of the Department, would indicate that the Department is trying to co-relate the input services to the output services. It is settled law that there cannot be one to one co-relation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on output services. Where no Service Tax is payable on any output service either because such service itself is exempt or because the service charges billed for in respect of such services becomes irrecoverable, the Service Tax credit was not available to the assessee, as the credit cannot be used as set off against output services in such cases. Accordingly, the adjudicating authority has confirmed the demand. 9. I find that the credit on the input service has been taken correctly. The inputs/input services have been used in providing output services. The output services are liable for payment of Service Tax. Hence, the eligibility of availing and utilizing the credit was not in question. As per Rule 6(10) of Service Tax Rules, Service Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nputs/input services availed is utilized in providing taxable output services. Hence, there is nothing wrong in availing and utilization of the credit. Rule 14 does not envisage recovery of credit in situations where Service Tax recovery was pending and written off as bad debts later. Further, I find that the bad debts have accumulated over a period of time. It is not possible to identify this bad debt with any particular invoice/invoices on which the recovery was pending. There is no one-to-one connection in availing and utilization of the credit in taxable output services. Hence, I find that there is no merit in the allegation that the input credit has been wrongly utilized. Thus, I hold that proportional credit on the amount of bad debts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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