Appellant entitled to Cenvat Credit for Service Tax on Debit Notes

The Tribunal allowed the appellant's appeal regarding Cenvat Credit eligibility based on Debit Notes issued by the service provider. It was held that the appellant was entitled to avail Cenvat Credit as the service provider had discharged Service Tax, and the appellant should not be denied credit for the tax borne by them. The impugned Order was set aside, emphasizing the importance of recognizing credit when Service Tax is duly discharged.

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Issues:
Cenvat Credit eligibility based on Debit Notes issued by service provider, Interpretation of Input Service Distributor definition under Cenvat Credit Rules, 2004.

Analysis:
The appeal was filed against Order-in-Appeal No.227/S.Tax.I/KOL/2017 dated 27.09.2017, where the appellant, a member of an association, availed Cenvat Credit based on Debit Notes issued by the service provider. The Revenue contended that the appellant was not entitled to avail Cenvat Credit as the service provider did not meet the Input Service Distributor definition under Rule 2(m) of the Cenvat Credit Rules, 2004.

Upon examining the case, it was found that the service provider had issued Debit Notes towards the proportionate share of the Subscription Fee paid, including Service Tax. Referring to a previous Tribunal decision, it was highlighted that when Service Tax is duly discharged by the service provider, the service recipient should not be denied credit for the Service Tax borne by them. The decision emphasized that if the department has accepted tax on services provided, they cannot then deny credit by claiming no services were rendered.

Based on the above discussion and the precedent cited, the impugned Order was set aside, and the appeal filed by the appellant was allowed. The Tribunal's decision was in favor of the appellant, emphasizing the importance of recognizing the credit due when Service Tax has been duly discharged by the service provider.

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