Cenvat credit on reverse charge service tax for manpower supply was admissible where the taxable service was received and tax was paid.

Cenvat credit on service tax paid under reverse charge for manpower supply was held admissible because the levy remained a tax on the taxable service itself, and payment by the recipient did not change its character. The Cenvat Credit Rules were read as not imposing a separate bar merely because the recipient was not the primary person liable to pay the tax, provided the service was received and tax stood paid. Denial of credit was therefore unsustainable.

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Issues: Whether Cenvat credit could be denied on service tax paid under reverse charge mechanism on man power supply service on the ground that the recipient was not liable to pay the tax.

Analysis: The service tax on man power supply was legally payable on the service itself, and the fact that the recipient discharged the tax did not alter the character of the levy. The Cenvat Credit Rules do not create a restriction that credit must be denied merely because tax was paid by a person who was not the primary person liable, so long as the taxable service was received and tax stood paid. The decision also followed the Tribunal's earlier view that credit is admissible where duty or tax has been paid and accepted, and the recipient otherwise satisfies the conditions for credit.

Conclusion: Cenvat credit was admissible and the denial of credit was unsustainable.

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