Tribunal allows appellant full tax credit for security services, rejecting department's recovery claim.

The Tribunal ruled in favor of the appellant, allowing them to avail 100% credit of the tax liability paid on security services. The decision emphasized that the notification only governed the distribution of tax liability between the service recipient and provider, not restricting the appellant from claiming full credit if the tax had been discharged and passed on to them. Citing relevant rules and legal precedents, the Tribunal granted the appellant the right to avail the cenvat credit, overturning the department's claim for recovery of allegedly wrongly availed credit.

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Issues:
1. Alleged wrongful availment of credit of service tax paid on security services during a specific period.
2. Interpretation of Notification No.30/2012-ST regarding distribution of tax liability between service recipient and service provider.
3. Dispute over the eligibility of the appellant to avail 100% credit of the tax liability discharged.

Analysis:

Issue 1: Alleged wrongful availment of credit
The case involved a manufacturing unit that allegedly wrongly availed credit of service tax paid on security services between July 2012 to August 2013. The department claimed that the appellant had paid 100% of the tax liability when, as per the notification, they were only liable to pay 75%. Consequently, the department issued a show cause notice proposing recovery of the allegedly wrongly availed credit along with interest and penalties. The original authority and the Commissioner (Appeals) upheld these proposals.

Issue 2: Interpretation of Notification No.30/2012-ST
The appellant argued that despite discharging 100% of the tax liability, they were billed and paid the amount by the service provider, who also filed returns confirming the payment. The appellant contended that based on Tribunal decisions and High Court rulings, they should be allowed to avail the credit based on the amount paid, regardless of the proportion specified in the notification.

Issue 3: Eligibility to avail 100% credit
The Tribunal analyzed the notification and relevant rules, emphasizing that the notification only dictates the distribution of tax liability between the service recipient and provider. It does not prohibit the service recipient from availing 100% credit if the tax liability has been discharged and passed on to them. The Tribunal cited Rule 3 of the Cenvat Credit Rules, 2004, which allows credit on duties paid on input services received. As the tax liability was fully paid and passed on to the appellant, they were entitled to avail the credit. The Tribunal allowed the appeal, granting consequential benefits as per the law.

In conclusion, the Tribunal ruled in favor of the appellant, highlighting that the notification did not restrict the appellant from availing the credit if the tax liability was discharged and passed on to them. The decision was based on a clear interpretation of the relevant rules and previous legal precedents, allowing the appellant to avail the cenvat credit.

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