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AI Drafter ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether CENVAT credit of service tax paid on manpower supply services could be denied to the service recipient merely because the service provider had initially paid the entire tax, despite the recipient being required under the notification to bear only a part of the liability.
Analysis: The service was received for use in the manufacture of excisable goods and the tax payment was reflected in the invoices. The governing scheme under Rule 4(7) of the CENVAT Credit Rules, 2004, read with Rule 9, permits credit when the service tax paid or payable is duly indicated in the invoice. The liability apportionment under Notification No. 30/2012-ST does not, by itself, determine credit eligibility. Applying the principle that tax actually paid and accepted cannot be treated as a mere deposit so as to defeat credit to a recipient who otherwise satisfies the conditions for availment, the denial of credit was not justified.
Conclusion: The denial of CENVAT credit was unsustainable and the assessee was entitled to the credit claimed.
Ratio Decidendi: Where taxable service has been received and the service tax paid is duly reflected in the invoice, credit cannot be denied to the recipient merely because the tax burden under the notification was apportioned differently between provider and recipient.
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