2010 (5) TMI 235 - AT - Service Tax

Tribunal reverses decision on disputed Cenvat credit, emphasizing liability on service providers.

HINDUSTAN COCA COLA BEVERAGES PVT. LTD. Versus CCE, MEERUT-II

The Tribunal set aside the lower authorities' decision regarding disputed Cenvat credit availed under 'Man-power Recruitment Service.' The appellant's ... Manpower Recruitment Service- Cenvat Credit- the appellant received services from two of the service providers, Khan Contractors and Alok Labour Organisation who have paid service tax under the Head “Man power Recruitment Service.” In order in original held that, in pursuance of the show cause notice dated 25-1-2006 held that service providers need not have paid service tax under “Man-power Recruitment Service” and therefore, the appellant as a recipient of the service was not entitled to take credit of the tax paid on these services. The Commissioner (Appeals) has upheld the order of the original authority. Held that- The Cenvat credit is sought to be denied is questioning the assessment of the service provider which is beyond the jurisdiction of the authorities in-charge of the appellant company. In view of the above, the orders of the authorities below cannot be sustained. The orders of the authorities below are set aside and the appeal allowed with consequential relief as per law. Issues:Disputed Cenvat credit availed by the appellant under 'Man-power Recruitment Service'.Analysis:The appeal before the Appellate Tribunal CESTAT, New Delhi, involved a dispute regarding the Cenvat credit availed by the appellant under the 'Man-power Recruitment Service.' The appellant had received services from two service providers who had paid service tax under this category from January 2005 to July 2005. The original authority held that the service providers were not required to pay service tax under this service, leading to a demand of Rs. 6,52,533/- along with penalties. The Commissioner (Appeals) upheld this decision.The appellant argued that they validly availed the services from the contractors who paid service tax under 'Man-power Recruitment Service,' citing relevant tribunal decisions. On the other hand, the Department contended that the issue was whether the service tax was correctly paid under this service, suggesting the matter might need to be referred to the Division Bench. Despite reiterating the Commissioner (Appeals)' findings, the Department raised concerns over the correctness of the service tax payment.The Tribunal noted that the dispute centered on the appellant's alleged wrong availing of Cenvat credit, falling under the jurisdiction of the Single Member Bench. It was observed that the denial of Cenvat credit was based on the presumption that the service providers should not have paid service tax under this service. The Tribunal highlighted a letter from the jurisdictional Superintendent directing the service provider to pay service tax under 'Man-Power Recruitment Service,' indicating that questioning the assessment of the service provider was beyond the appellant's jurisdiction. The Tribunal emphasized that if the Department wished to challenge the service tax payment, they should issue a show cause notice to the service providers rather than the recipient unit.Consequently, the Tribunal concluded that the orders of the authorities below could not be sustained. As a result, the Tribunal set aside the lower authorities' orders and allowed the appeal with consequential relief as per the law.