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TMI Blog2014 (7) TMI 1018X X X X Extracts X X X X X X X X Extracts X X X X ..... e. In this case Cenvat credit has been utilized for payment of duty liability arising under section 66A of Finance Act, 1994 on service receiver after a specific Explanation prohibiting such use was introduced in Rule 4(4) with effect from 01-07-2012. Therefore, the pre-deposit made is not proper - However, time period for making pre deposit is extended - applicant allowed to reverse the credit already made in Cenvat account for complying with stay order - Decided partly in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... x at the rate specified in section 66 in such manner and within such period as may be prescribed. (2) Notwithstanding anything contained in sub-section (1), in respect of such taxable services as may be notified by the Central Government in the Official Gazette, the service tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified in section 66 and all the provisions of this Chapter shall apply to such person as if he is the person liable for paying the service tax in relation to such service : Rule 2 (d) (iv) of Service Tax Rules, 1994 "(d)" person liable for paying the service tax" means,- --- (iv) in relation to any taxable service provided or to be provided by any person from a country other than India and received by any person in India under section 66A of the Act, the recipient of such service;" Rule 2 (p) of Cenvat Credit Rules, 2004 (p) "output service" means any taxable service provided by the provider of taxable service, to a customer, client, subscriber, policy holder or any other person, as the case may be, and the expressions 'provider' and 'provided' shall be construed accordingly; Explanation. - For t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect from 01-03-2008 to 30-06-2012 During this period the significant change is amendment in Rule 2 (p) to specifically exclude service rendered by Goods transport Agency from the scope of Rule 2 (p) of Cenvat Credit Rules 2004. '(p) "output service" means any taxable service, excluding the taxable service referred to in sub-clause (zzp) of clause (105) of section 65 of the Finance Act, provided by the provider of taxable service, to a customer, client, subscriber, policy holder or any other person, as the case may be, and the expressions "provider' and 'provided' shall be construed accordingly;' (It is to be noted that the part in bold letters above are included wef 01- 03-2008) 4.4 Changes in Rules with effect from 01-07-2012 till date During this period, the significant change is the addition of an explanation in Rule 3(4) of Cenvat credit Rules delaing with how Cenvat credit can be utilized. The said explanation reads as under: "Explanation.- Cenvat credit cannot be utilized for payment of service tax in respect of services where the person liable to pay tax is the service recipient" 5. Against such background, Ld. Advocate for Appellant relies on Rule 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in para 4.4 above. 9. Further, he relies on the decision of the Tribunal in Sangam (India Ltd. Vs CCE Jaipur 2012 (26) STR 241 (Tri.- Del.). He relies on para 5 of the said order which reads as under :- 5. A service for being called out for "output service" under Rule 2(p) must satisfy two conditions - (i) it must be provided by the provider of taxable service; (ii) it must be provided to some customer, client, subscriber, policy holder or any other person or in other words to some client or customer of the provider of taxable service. A taxable service received by a person from an offshore service provider in respect of which that person by virtue of the provisions of Section 66A of Finance Act, 1994 read with Rule 2(1)(d)(iv) of Service Tax Rules, 1994 is liable to pay the service tax, is deemed to have been provided by that person in India and that person by virtue of this provision of Rule 2(g) of Cenvat Credit Rules, 2004 is deemed to be provider of taxable service. The question arises as to whether the service received from offshore service provider on which the service recipient is liable to pay service tax can be treated as his 'output service' for the purpose of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch there is no provision. 10. the Ld. A. R. for Revenue submits that as on date there is no fiction created in section 68 of Finance Act, 1994 or Service Tax Rules, 1994 or Cenvat Credit Rule, 2004 or Taxation of Service (Provided from Outside India and Received in India) Rules, 2006 any other Rules to the effect that appellant is a provider of output service. There is only a legal provision that person receiving service from abroad has to pay service tax on such services. At the same time Cenvat credit Rules has provision in Rule 3(4) to the effect that a service recipient while paying tax under section 66A cannot utilize Cenvat Credit for paying tax liability. 11. We have considered submissions on both sides. The risk to Revenue in allowing utilization of Cenvat credit for discharging tax liability on services received is as follows. Let us take a case where an assessee who is not manufacturing any excisable product or providing any taxable service. But he has to pay service tax on royalty service received from abroad valued at ₹ 1 crore in an year. As per provisions of section 66A and assuming a tax rate of 10% the assessee has to pay tax of 10 lakhs in an year and this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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