CENVAT credit on invoiced support services upheld where service tax was paid by the provider and assessment remained undisturbed.

CENVAT credit of service tax charged on dealer commission and allied support services could not be denied to the recipient merely because the Department re-characterised the transaction. The Tribunal applied its earlier ruling that, where the service provider had invoiced, collected, and paid service tax on the transaction, the recipient's credit remains admissible unless the assessment at the service provider's end is first reopened or revised. On that basis, the denial of credit was unsustainable, and the connected demand, interest, and penalty were set aside with consequential relief.

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Issues: Whether the appellant was entitled to CENVAT credit of service tax charged by automobile dealers and allied service providers for support services rendered in connection with sale of insurance policies, and whether such credit could be denied at the recipient's end without disturbing the assessment of the service provider.

Analysis: The Tribunal followed its earlier decision on the same line of transactions and the principle laid down therein that, where service tax has been collected and paid by the service provider on the invoiced transaction, the credit cannot be denied to the recipient merely on a re-characterisation of the transaction unless the assessment at the service provider's end is first reopened or revised. The Tribunal applied this reasoning to the dealer commission/support arrangements, including the amounts routed through invoices raised by automobile dealers and other entities, and held that the Department could not deny credit at the recipient's end on the premise that no service was rendered when the tax treatment at the provider's end remained undisturbed.

Conclusion: The appellant was held entitled to avail CENVAT credit of the service tax charged by the automobile dealers in the course of rendering support services, and the impugned order denying credit was unsustainable.

Final Conclusion: The order denying credit, together with the connected demand, interest, and penalty, was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: Credit of service tax validly paid by the service provider on an invoiced transaction cannot be denied to the recipient on a mere reappraisal of the nature of service unless the assessment at the service-provider's end is first reopened or revised.

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