Reverse charge point of taxation follows Rule 7, not Rule 8B, for ocean freight service tax credit claims.

Where service tax is payable by the recipient under reverse charge mechanism, the point of taxation is governed by Rule 7 of the Point of Taxation Rules, 2011, which fixes liability by reference to the date of payment subject to the proviso. Rule 8B, which applies to transportation of goods by vessel from outside India up to the customs station of clearance in India, does not govern such reverse charge ocean freight services on these facts. On that basis, service tax paid on the invoices was eligible for Cenvat credit, and the demand confirmation was unsustainable.

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Issues: Whether Rule 8B or Rule 7 of the Point of Taxation Rules, 2011 governed the point of taxation for ocean freight services liable under reverse charge mechanism, and whether the appellant was entitled to the Cenvat credit taken on that service tax payment.

Analysis: The liability in question arose in respect of services on which tax was payable by the recipient under reverse charge mechanism. Rule 7 applies to persons required to pay tax as recipients of service notified under section 68(2) of the Finance Act, 1994, and fixes the point of taxation as the date of payment, subject to the stated proviso. Rule 8B, dealing with transportation of goods by vessel from outside India up to the customs station of clearance in India, was therefore inapplicable on the facts. Since the service tax on the impugned invoices was paid on 30 June 2017, the appellant had correctly availed the credit.

Conclusion: Rule 7 applied, Rule 8B did not apply, and the demand confirmation was unsustainable. The decision was in favour of the assessee.

Final Conclusion: The impugned demand confirmation was set aside and the appeal was allowed.

Ratio Decidendi: Where service tax is payable by the recipient under reverse charge mechanism, the point of taxation is governed by Rule 7 of the Point of Taxation Rules, 2011 and not by Rule 8B of those Rules.

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