CENVAT credit on service tax cannot be denied when tax was paid and invoiced, despite reverse charge apportionment issues.

CENVAT credit on service tax could not be denied merely because the service provider paid the full tax amount under an arrangement where liability was otherwise to be shared under reverse charge. Entitlement to credit depended on payment of service tax, reflection in the invoice, and use of the input service in or in relation to manufacture. The apportionment of liability under Notification No. 30/2012-ST did not control the recipient's credit claim, and the amount paid by the provider could not be treated as a mere deposit when substantive credit conditions were satisfied. Credit was therefore available to the recipient.

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Issues: Whether CENVAT credit of service tax could be denied to the recipient merely because the service provider had paid the full tax amount, although the service recipient was statutorily required to bear part of the liability under the reverse charge arrangement.

Analysis: The entitlement to CENVAT credit depended on whether service tax had been paid and properly reflected in the invoice, and whether the input service was used in or in relation to manufacture. The apportionment of tax liability under Notification No. 30/2012-ST did not govern the recipient's credit entitlement. The amount paid by the service provider could not be treated as a mere deposit so as to deny credit when the invoice evidenced payment and the statutory conditions for credit were otherwise satisfied.

Conclusion: The denial of credit was unsustainable and the assessee was entitled to take CENVAT credit of the service tax paid.

Ratio Decidendi: Credit cannot be denied to a recipient where tax has been paid and invoiced, merely because the tax was discharged by the service provider in a manner inconsistent with the reverse charge apportionment, so long as the substantive conditions for credit are met.

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