2017 (4) TMI 439 - AT - Service Tax

Appellant permitted to pay service tax from cenvat account as service recipient, Tribunal rules in favor.

M/s. Hind Spinners Versus C.C.E. Bhopal

The Tribunal allowed the appellant to pay service tax from its cenvat account as the recipient of service, citing precedents from various High Courts. ... Whether, the appellant in the capacity of recipient of service can pay service tax from its cenvat account? Held that: - the issue involved in this case is no more res-integra in view of the judgment of Hon’ble Gujarat High Court in the case of Commissioner of Central Excise and Customs Vs. Panchmahal Steel Ltd., [2014 (12) TMI 876 - GUJARAT HIGH COURT] where it was held that though the assessee was liable to pay service tax on GTA Service, it could have utilized Cenvat credit for the purpose of paying such duty - appeal allowed - decided in favor of appellant. Issues:Whether the appellant, as the recipient of service, can pay service tax from its cenvat account.Analysis:The appellant, engaged in the manufacture of P.V. Yarn, appointed foreign commission agents for export orders and discharged service tax liability as the recipient of service under Rule 2(1)(iv) of the Service Tax Rules, 1994. The Department disputed the payment from the cenvat account, alleging a contravention of Rule 3(4) of the Cenvat Credit Rules, 2004. Despite the appellant's absence during the hearing, the Tribunal considered the issue of whether the appellant, as the recipient of service, can use the cenvat account to pay service tax.The Tribunal referred to the judgment of the Hon'ble Gujarat High Court in the case of Commissioner of Central Excise and Customs Vs. Panchmahal Steel Ltd., which allowed the utilization of cenvat credit for service tax payment by the recipient of service. Citing precedents from the Hon'ble Delhi High Court and the Hon'ble Punjab and Haryana High Court, the Tribunal upheld the permissibility of using cenvat credit for service tax payment by the recipient. The Tribunal highlighted that Rule 3(4) of the Cenvat Credit Rules, 2004 allows for the utilization of cenvat credit for the payment of service tax on output services.Based on the settled legal position established by the aforementioned judgments, the Tribunal found no merits in the Department's contentions. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant. The Tribunal pronounced its decision on 17.03.2017, emphasizing the appellant's right to use the cenvat account for service tax payment as the recipient of service.