CENVAT credit may be used to pay reverse charge service tax on imported input services, subject to jurisdictional precedent.

CENVAT credit could be used to discharge service tax payable under the reverse charge mechanism on input services received from abroad. The liability to pay tax on such imported services was fastened on the recipient in law, and the recipient was treated as the service provider for that purpose. Relying on jurisdictional High Court decisions, the Tribunal rejected the contrary departmental view and accepted utilisation of available CENVAT credit against the reverse charge liability. The demand therefore did not survive.

---

---

Issues: Whether the CENVAT credit available with the assessee could be utilised for payment of service tax discharged under the reverse charge mechanism on input services received from abroad.

Analysis: The liability to pay tax on services received from outside India was fastened on the recipient in law, and the recipient was treated as the service provider for that purpose. Following the jurisdictional High Court decisions holding that CENVAT credit available with such recipient could be used to discharge the tax liability arising under reverse charge, the Tribunal declined to follow the contrary view relied on by the department.

Conclusion: The assessee was entitled to utilise CENVAT credit for payment of service tax under reverse charge, and the demand did not survive.

---