TaxTMI 
TaxTMI 
2013 (8) TMI 497
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.... provisions of Cenvat Credit Rules, 2004. The dispute in this case is about the Cenvat credit of service tax in respect of certain input services received by them during the period from April 2009 to December 2009. The respondent in terms of their contract with the service providers, while making payment to the service providers against the invoices raised by them, retained a percentage of the billed amount towards performance guarantee which was being paid subsequently after certain period. The invoices raised by the service providers show payment of service tax on full invoice value and this is not disputed. The respondent in this case, while not making full payment of the billed amount and retaining with them a part of the amount billed ....
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....ndred percent and the retained amount was to be received later on, and on this basis they had pleaded that since the service tax has been paid by the service providers on the full invoice value including the amount not received by them, they (respondent) may be allowed its Cenvat credit. However, this plea was not accepted by the Assistant Commissioner observing that even if the entire input service is received and the service tax on the entire value of service is paid by the service provider, the service tax credit to the extent which is proportionate to the value of the service not paid by the assessee is clearly not admissible in terms of Rule 4 (7) of the Cenvat Credit Rules. 1.2 The respondent filed an appeal to the Commissioner (Appe....
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....availing the Cenvat credit, part of the value of the service received by the respondent had not been paid by them, Cenvat credit in respect of that part of the value of service would not be admissible and that the Board's Circular cannot be beyond the provisions of the rule. He, therefore, pleaded that the impugned order is incorrect. 4. Shri B.L. Narasimhan, Advocate, the learned Counsel for the respondent, pleaded that from the very beginning, the respondent's stand has been that the service providers had paid full amount of service tax on the amount billed by them, that is, on the invoice value, even though they were not entitled to receive the said amount hundred percent immediately on presenting the bills and certain amount was to be ....
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....t had not been made by the respondent to the service providers and a part of the invoice value had been retained as performance guarantee. This position is not disputed by the department. The point of dispute is as to whether in such a situation, in view of the provisions of Rule 4 (7) of the Cenvat Credit Rules, full amount of Cenvat credit would be available to the respondent or they would be eligible only for the proportionate amount of Cenvat credit to the extent the payment against the invoices presented by the service providers had been made. On this point, the Board in its Circular dated 30th April 2010 has clarified as under:- 3. As per sub-rule (7) of Rule 4 of the Cenvat Credit Rules, 2004 ,Credit in respect of input service shal....
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....thereon due to some reasons. 5. Matter has been examined and clarification in respect of each of the above mentioned issues is as under , - (a) When the substantive law i.e. Section 67 of the Finance Act, 1994 treats such book adjustments etc., as deemed payment, there is no reason for denying such extended meaning to the word 'payment' for availment of credit. As far as the provisions of Rule 4 (7) are concerned, it only provides that the Cenvat credit shall be allowed, on or after the date on which payment is made of the value of the input service and of service tax. The form of payment is not indicated in the same and the rule does not place restriction on payment through debit in the books of accounts. Therefore, if the service charge....
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....rvice tax paid by the service provider has not changed. 7. The rationale behind Rule 4 (7) of the Cenvat Credit Rules is that during the period prior to 1/3/11, which is the period of dispute in this case, by virtue of Rule 6 (1) of the Service Tax Rules, 1994, service tax in respect of the service provided or to be provided was payable by 6th day of the month immediately following the month in which the payment for the service provided or to be provided was received by the service provider. This rule had been framed to prevent a situation where while on the basis of the invoice issued by a service provider in respect of some service provided or to be provided, the service recipient takes the Cenvat credit, even though the service provider....