Service tax credit confined to matching taxable service categories; credit denied where input and output services fell under different sub-clauses.

Service tax credit under Rule 3 of the Service Tax Credit Rules, 2002 was allowable only when the input and output services were treated as the same taxable service category, and the deeming provision required them to fall within the same sub-clause of Section 65(90) of the Finance Act, 1994. Because steamer agent services and cargo handling services fell under different sub-clauses, the statutory condition for credit was not met. The denial of credit was upheld.

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Issues: Whether service tax credit was admissible when the input service and output service did not fall within the same sub-clause of clause (90) of Section 65 of the Finance Act, 1994.

Analysis: Rule 3 of the Service Tax Credit Rules, 2002 permits credit only where the input service and output service fall in the same category of taxable service, and the deeming provision further requires both services to be in the same sub-clause of clause (90) of Section 65. As the input service of steamer agent services and the output service of cargo handling services fell under different sub-clauses, the statutory condition for credit was not satisfied.

Conclusion: The denial of service tax credit was upheld and the appeal failed.

Final Conclusion: The assessee was not entitled to the disputed credit because the input and output services were treated as belonging to different statutory categories.

Ratio Decidendi: Service tax credit under the relevant rules is allowable only when the input and output services are statutorily treated as falling in the same category and, where a deeming provision so requires, in the same sub-clause of the charging classification.

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