Cenvat credit cannot be denied when service tax was paid by a registered provider and the provider-side assessment remained undisturbed.

Cenvat credit of service tax paid on input services cannot be denied to the recipient where the service provider was registered, the tax was actually remitted to the Government, and the provider-side assessment remained undisturbed. Rule 3(1) permits credit subject to receipt of service and prescribed documentation under Rule 9, while Rule 14 and the recovery provisions apply only where credit is wrongly taken and utilised. The recipient's jurisdictional authorities cannot reject credit merely by reappraising the nature of the transaction or invoice at the recipient level when the provider's tax payment has not been reopened.

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Issues: Whether Cenvat credit of service tax paid by the service provider could be denied to the service recipient when the service provider was registered, had paid the tax to the Government, and the assessment at the provider's end had not been reopened.

Analysis: Rule 3(1) of the Cenvat Credit Rules, 2004 enables credit of service tax paid on input services, subject to receipt of service and prescribed documentation under Rule 9. Rule 14 applies where credit is wrongly taken and utilised, with recovery following the mechanism under Sections 73 and 75 of the Finance Act, 1994. The record showed that the dealers were registered and had remitted the service tax into the Government exchequer. In such a situation, the recipient's credit could not be denied merely because the department disputed the character of the invoice or the nature of the transaction at the recipient's end, especially when the provider-side assessment had not been disturbed. The same principle was applied by the cited precedent that recipient-side authorities cannot sit in judgment over an undisputed provider-side assessment.

Conclusion: Denial of Cenvat credit at the recipient's end was unsustainable and the issue was decided in favour of the assessee.

Ratio Decidendi: Where service tax has been paid by a registered service provider and the provider-side assessment remains undisturbed, credit cannot be denied to the recipient merely on a reappraisal of the transaction by the recipient's jurisdictional authorities.

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