Cenvat credit cannot be denied when full service tax was paid and accepted, despite a lower prescribed rate in the notification.

Cenvat credit could not be restricted where the service provider had discharged service tax on the full taxable value and the tax authorities had accepted that payment as revenue. Credit taken by the recipient on the basis of invoices showing the actual tax paid was consistent with the Cenvat scheme, so denial of the balance credit solely because Notification No. 30/2012-ST contemplated a lower prescribed rate was unsustainable.

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Issues: Whether the appellant was entitled to avail Cenvat credit of the entire service tax paid by the service provider, instead of credit restricted to 45% under Notification No. 30/2012-ST dated 20.06.2012.

Analysis: The service provider was registered with the service tax department and had discharged service tax on the full taxable value. That payment was not disputed by the jurisdictional service tax authorities and the tax so paid had been retained as Government revenue. Since the appellant availed credit on the basis of invoices reflecting the service tax actually paid, the availment was consistent with the Cenvat scheme.

Conclusion: The appellant was entitled to take Cenvat credit of the entire service tax paid by the service provider, and the impugned order was unsustainable.

Ratio Decidendi: Where service tax has been duly paid on the full taxable value by the service provider and accepted by the tax authorities, the recipient cannot be denied Cenvat credit merely because a lower prescribed rate was contemplated under the notification.

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