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TMI Blog2015 (2) TMI 272X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;, ‘provider of taxable service' and ‘person liable for paying service tax' remain the same. Since in the case of Insurance Auxiliary Service, the liability to pay Service Tax is on the service recipient in terms of Rule 2 (1)(d)(iii) of the Service Tax Rules, 1994, the appellants are the providers of the output service as defined in law. Therefore, the appellants are entitled to avail CENVAT Credit on the input services used for providing the output service. Consequently, there is no bar in utilization of CENVAT Credit for payment of Service Tax on Insurance Auxiliary Service by the appellants. There is no one to one correlation required between the input service and the output service under the CENVAT Credit Scheme and, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lating the provisions of Rule 3(4)(e) of Cenvat Credit Rules, 2004 and as such failed to pay Service Tax amounting to ₹ 5,44,65,756/-. The second allegation under the show-cause notice was that the appellant have utilized excess CENVAT Credit amounting to ₹ 6,50,50,594/- violating the provisions of Rule 6(3)(c) of Cenvat Credit Rules,2004, for payment of Service Tax on taxable output service, which is more than 20% of the amount of Service Tax payable on taxable output service and as such failed to pay Service Tax to the department amounting to ₹ 6,50,50,594/- under Section 68 of the Finance Act, 1994 read with Rule 6 of the Service Tax Rules, 1994, along with propose to levy interest and to impose penalty under Sections 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 reported at Appeal No. ST/64, 66, 198/08 ST/237 218/12 . The operative part of the order is being reproduced herein below for ready reference:- 5. We have carefully considered the submissions made by both sides. 5.1 Prior to 19.4.2006, Rules 2(p), (q) and (r) read as follows:- 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 removal of doubt it is hereby clarified that if a person liable for paying Service Tax does not provide any taxable service or does not manufacture final produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Service Tax Rules, 1994, the appellants are the providers of the output service as defined in law. Therefore, the appellants are entitled to avail CENVAT Credit on the input services used for providing the output service. Consequently, there is no bar in utilization of CENVAT Credit for payment of Service Tax on Insurance Auxiliary Service by the appellants. This is the settled legal position as can be seen from the decisions of the Hon'ble Punjab Haryana High Court and Hon'ble Delhi High Court in the case of Nahar Industrial Enterprises Ltd., Nahar Spinning Mills and Auro Spinning Mills Hero Honda Motors Ltd. (supra). The Hon'ble Delhi High Court rejected the contention of the Revenue that recipient of Goods Transport Agenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service of Insurance Auxiliary Service . 5.4 We also note that there is no one to one correlation required between the input service and the output service under the CENVAT Credit Scheme and, therefore, the demands confirmed against the appellants for recovery of CENVAT Credit availed by them for discharging Service Tax liability on Insurance Auxiliary Service is clearly unsustainable and accordingly, we set aside the same. 5.5 The next question for consideration is whether for the period prior to 1.4.2008, the appellant could have utilized CENVAT Credit in excess of 20% of the Service Tax payable on the output service in view of the sub-rule(3) of Rule 6 of Cenvat Credit Rules. Sub-Rule (5) of Rule 6 reads as follows:- Notwithst ..... X X X X Extracts X X X X X X X X Extracts X X X X
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