TaxTMI 
TaxTMI 
2017 (10) TMI 973
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....g certain inputs and input services and availing CENVAT credit thereof. On their output service, in case of pre-paid connection, the appellant is not receiving amount of service provided by them from the recipient of the service and during the impugned period, the service tax was payable on receipt of the amount of service tax from the service recipient. Therefore, it was alleged that appellant is not entitled to avail CENVAT credit on the inputs/input services attributable to the output service for which they could not realize the amount of service provided by them from the service recipient as the service tax has not been paid thereon. The matter was adjudicated and the demand on account of input/input service attributable to the output s....
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....e basis of actual realization of amounts towards the cost of service. Where the cost of service billed become irrecoverable for any reason and the same is written off fully in the in the books of accounts of the assessee, the element of input service credit attributable to such write off was required to be reversed or paid by the appellants as no Service Tax was realized on the output service in which such input service has been used. The CENVAT Credit scheme envisages availment of credit towards payment of Service Tax on output services. Where no Service Tax is payable on any output service either because such service itself is exempt or because the service charges billed for in respect of such services becomes irrecoverable, the Service T....
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....ervices. It is settled law that there cannot be one-to-one co-relation in availing of the CENVAT Credit of the input service to the provision of output service. I find that the first appellate authority while appreciating the law, had recorded the following :- "8. I find that the show cause notice has been issued to deny proportional CENVAT Credit on the ground that certain amount has been shown as bad debts in the books of accounts of the appellants and the adjudicating authority has also confirmed the demand made in the show cause notice. As per Rule 6(10) of Service Tax Rules, 1994, Service Tax shall be paid to the credit of the Central Government on prescribed due date in which the payment are received towards the value of taxa....
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....lizing the credit was not in question. As per Rule 6(10) of Service Tax Rules, Service Tax is payable when the payment towards taxable services are received. No Service Tax is payable on that part of the payment which is not received. No Service Tax is payable on that part of the payment which is not received. There is no provision in the CENVAT Credit rules to deny proportional credit on the inputs which were used in providing the output service on which recovery is pending. The adjudicating authority has cited Rule 14 of CENVAT Credit Rules and held that when Service Tax was not realized, the output service has not suffered any Service Tax. Hence, the credit availed would fall under the category of wrongly utilized credit and Rule 14 of C....