Credit availability of the service tax already paid

[Asked by Guest]

If the receiver of service has paid service tax to the service provider and after payment it is known that the service received was not taxable at all then whether the service receiver can avail credit of the service tax paid. Issue arise since department says that service tax credit of the same is not available.

AI Summary

Service tax credit denied where charged on non-taxable services; recipient should seek refund rather than Cenvat credit.
Whether a recipient may take Cenvat Credit for service tax later found not leviable: credit is allowed only for service tax properly leviable on input services; an amount paid where the service was not taxable is an erroneous tax charge and not admissible as credit. The advised remedial mechanism is for the recipient to lodge a refund claim for the amount paid in error rather than treat it as Cenvat Credit; refund by the service provider risks unjust enrichment. Verification of input service status is recommended before action.