High Court Upholds Legality of Service Tax Payment via Reverse Charge Mechanism

The appeal under Section 35-G of the Central Excise Act, 1944 against service tax payment by reverse charge mechanism through CENVAT credit utilization was dismissed by the High Court. The Court relied on previous judgments, including Union of India v. Mohini Industries, where it was established that service tax payment through reverse charge mechanism using CENVAT credit is legal. Since the legal question had already been settled by the Division Bench in the earlier case, the Court found no grounds to entertain the appeal and upheld the legality of the service tax payment method.

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Issues involved: Appeal under Section 35-G of the Central Excise Act, 1944 against service tax payment by reverse charge mechanism through utilization of CENVAT credit.

Analysis:
1. The appeal was filed against the final order passed by the Customs, Excise & Service Tax Appellate Tribunal, New Delhi. The Appellant raised the issue of service tax payment by reverse charge mechanism through the use of CENVAT credit as a question of law. The Tribunal referred to a previous judgment (2012 (25) STR 129) in CCE v. Nahar Industrial Enterprises, which the department challenged with a Special Leave Petition. The Respondent acknowledged the issue but pointed out that a Division Bench of the same Court had already decided the matter in Tax Case Nos. 44 and 46 of 2007 (Union of India v. Mohini Industries) on 13.12.2012, supported by another case (2013 (29) STR 358) Commissioner of Service Tax v. Hero Honda Motors Ltd., affirming the legality of service tax payment through reverse charge mechanism using CENVAT credit.

2. The Court noted that the Division Bench had already addressed the same legal question in Tax Case Nos. 44 and 46 of 2007 (Union of India v. Mohini Industries) and had ruled in favor of the legality of service tax payment through reverse charge mechanism by utilizing CENVAT credit. As the issue had been conclusively settled by the Division Bench, the Court found no reason to entertain the present appeal or formulate any new legal questions for consideration. Consequently, the Court dismissed the appeal based on the precedents and legal clarity provided by the previous judgments on the matter.

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