2017 (7) TMI 347 - AT - Service Tax

Tribunal rules in favor of appellant, setting aside service tax order. Appellant eligible for CENVAT Credit.

M/s Truwoods Pvt Ltd. Versus CCE, C & ST, Visakhapatnam-I

The Tribunal set aside the Order-in-Appeal confirming a service tax amount against the appellant, ruling in favor of the appellant. It held that taxing ... Manpower recruitment service - N/N. 30/2012 and 45/2012 - reverse charge - Held that: - there is no dispute service tax liability of the services rendered by the service the appellant stands discharged. Again taxing the appellant 75% of the amount of the value of the services as a recipient of the service, would amount to double taxation which is not the mandate of FA, 1994 - reliance placed in the case of Navyug Alloys Pvt Ltd. [2008 (8) TMI 100 - CESTAT AHEMDABAD], where same issue came up before the Bench in respect of the services rendered by GTA services wherein the service provider discharged the service tax liability and demands were raised from the service recipient, and it was held that once the tax is already paid on the services, it was not open to the Department to confirm the same against the appellant, in respect of the same services. CENVAT credit - reverse charge - Held that: - if the service provider discharges the entire service tax liability, the appellant is eligible to avail the CENVAT Credit of the said amount which has been taxed and deposited with the government as it is settled law that an assessment cannot be called in question in the hands of the recipient of the services. Appeal allowed - decided in favor of appellant. Issues:1. Discharge of service tax liability by the appellant as a recipient of services.2. Applicability of reverse charge mechanism on service tax liability.3. Eligibility of CENVAT Credit for the appellant.Analysis:1. The appellant was contesting an appeal against the Order-in-Appeal confirming a service tax amount against them. The Revenue argued that the appellant, as a recipient of services, had to discharge service tax liability on 75% of the value of services under reverse charge mechanism. However, the appellant claimed that the service provider had already paid the service tax on the total amount of invoices raised for the services provided. Both lower authorities acknowledged this fact.2. The Tribunal found the Revenue's argument incorrect, stating that there was no dispute regarding the service tax liability of the services rendered by the service provider. Taxing the appellant on 75% of the service value would lead to double taxation, contrary to the Finance Act, 1994. The Tribunal cited precedents where similar issues arose, emphasizing that if the service provider had already paid the service tax, the recipient should not be charged again.3. The lower authorities had denied the appellant's claim for CENVAT Credit on the service tax paid by the service provider, stating it could only be availed on 25% of the service value. The Tribunal disagreed, highlighting that if the service provider had fulfilled the service tax liability, the appellant was entitled to avail CENVAT Credit on the taxed amount. It clarified that the recipient cannot be questioned for an assessment already completed by the service provider.4. Consequently, the Tribunal held the impugned order unsustainable and set it aside, allowing the appeal in favor of the appellant. The judgment emphasized that once the service provider has paid the service tax and the amount has been deposited with the government, the recipient should not be charged again. The appellant was deemed eligible for CENVAT Credit on the taxed amount paid by the service provider, as per established legal principles.