Court allows service tax credit despite timing discrepancy with provider's tax payment. Payment for services key.

The Court ruled in favor of the appellant, allowing the service tax credit claimed based on invoices despite a timing discrepancy with the service provider's tax payment. The judgment emphasized that credit could be availed upon payment for services, not contingent on the provider's tax payment timing. The Court clarified that compliance with invoice details was secondary to the actual payment for services. The decision, issued on 23.4.2014, overturned the previous ruling, granting relief to the appellant under Rule 4(7) of the Cenvat Credit Rules 2004.

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Issues:
1. Availment of service tax credit based on invoices issued by service provider.
2. Discrepancy in timing of credit availed and service tax payment by service provider.
3. Compliance with Cenvat Credit Rules 2004 regarding documentation for credit availment.
4. Interpretation of Rule 4(7) of Cenvat Credit Rules 2004 for allowing credit based on payment date.

Analysis:
1. The dispute in the appeal concerns the appellant availing service tax credit of Rs. 2,10,138 based on invoices from the service provider. The Revenue contends that the credit was claimed in March 2007, while the service provider paid the service tax in April and May 2007.

2. The Commissioner (Appeals) highlighted that the invoices lacked essential details required by Rule 4A of Service Tax Rules 1994 and Rule 9(1) of Cenvat Credit Rules 2004. The Commissioner noted that the appellant took credit before the service tax was deposited by the providers, deeming it inadmissible.

3. The judgment emphasized that the service providers eventually paid the service tax, rendering the technical objection regarding invoice compliance irrelevant. The key issue was whether the appellant could claim credit upon paying for services and service tax to the provider. The invoices were dated 7.3.2007, and credit was availed on 31.3.2007 post-payment.

4. Rule 4(7) of Cenvat Credit Rules 2004 stipulates that credit for input service can be allowed upon payment of the service value and tax as per the invoice. It clarified that the service tax payment by the provider before credit availment is not a prerequisite. The responsibility for recovering unpaid service tax lies with the service provider, not the credit claimant.

5. Consequently, the judgment overturned the impugned order, granting the appeal in favor of the appellant. The decision highlighted the adherence to Rule 4(7) for allowing credit based on payment dates, providing consequential relief to the appellant. The ruling was pronounced on 23.4.2014.

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