2008 (5) TMI 41 - AT - Service Tax

Tribunal allows Cenvat Credit on service tax paid by sub-contractor, clarifies credit rules since 2002.

MAERSK INDIA PVT. LTD. Versus CCE, RAIGAD

The Tribunal set aside the Commissioner (Appeals) order and provided relief to the appellant, allowing the appellant to avail Cenvat Credit of service tax ... Repairs of empty containers - SCN issued on ground that sub-contractors are not required to pay any service tax and accordingly the credit taken by them (contractor) was incorrect - once the service tax has been paid by the supplier, the availability of credit at the receiver’s end cannot be questioned as long as payment of service tax is established and accordingly the credit also cannot be denied – appeal of assessee is allowed Issues:1. Availment of service tax credit by the appellant questioned by Revenue.2. Dispute regarding existence of agreement between contractor and sub-contractor for providing services.3. Applicability of Service Tax Credit Rules and alignment with Cenvat Credit Rules.Analysis:1. The appellant, a sub-contractor undertaking repairs of empty containers, availed Cenvat Credit of service tax paid by the sub-contractor for the output service provided to customers. Revenue challenged this claiming the sub-contractor was not liable to pay service tax. Asst. Commissioner held no agreement existed for taxable services, making the credit irregular. Commissioner (Appeals) upheld this, questioning the service's taxability due to lack of proof of agreement.2. The appellant argued the Commissioner's findings were contradictory as an agreement copy was submitted. The appellant cited precedents emphasizing that once payment of tax is not disputed, credit cannot be denied. The appellant also referred to the existence of an agreement between the parties, which the Commissioner (Appeals) acknowledged, supporting the appellant's claim for credit.3. The Revenue contended that the credit was available only post-2004 alignment of Service Tax Credit Rules. However, the appellant clarified that the credit was available from 2002 as per Notification No. 14/2002-ST. The Tribunal noted the lack of specific findings on this aspect by the authorities and emphasized that once service tax was paid by the supplier, the credit could not be denied. The Tribunal set aside the Commissioner (Appeals) order, providing relief to the appellant based on the available credit rules since 2002.This judgment clarifies the importance of agreements in establishing tax liabilities, the non-disputable nature of tax payments, and the applicability of credit rules from the date of their inception.