Cenvat credit on input services did not bar composition scheme benefit where invoices showed no credit on inputs.

The Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 required non-availment of Cenvat credit on inputs, but did not bar credit on input services. On the invoices examined, the adjudicating authority found that the credit taken related to input services and not inputs, and the Tribunal found no contrary invoice on record. On that factual basis, the assessee was treated as satisfying the scheme conditions, and the challenge to denial of the composition benefit failed.

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Issues: Whether the assessee was entitled to the benefit of the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 under Notification No. 32/2007-ST dated 22.05.2007 on the basis of the invoices examined, and whether the Revenue could succeed in challenging the order for want of examination of all invoices.

Analysis: The notification and scheme required non-availment of Cenvat credit on inputs, but did not prohibit Cenvat credit on input services. The adjudicating authority had examined sample invoices and found that the credit availed was on input services, not on inputs. The record before the Tribunal did not contain any invoice contradicting that finding. On that basis, the finding that the assessee satisfied the conditions for the scheme was upheld.

Conclusion: The assessee was held entitled to the benefit of the composition scheme, and the Revenue's challenge to the grant of that benefit failed.

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