TaxTMI 
TaxTMI 
TaxTMI 
2019 (6) TMI 74
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.... 'banking and financial services' during the relevant period from 2008-09 to 2010-11. During the course of audit, it came to the notice of the department that the appellant had made payment against services in foreign currency to overseas service provider, viz. Visa and Master Card, for using their network for credit card operations. A total amount of Rs. 26,67,63,216/- was the service tax payable on reverse charge mechanism as per Section 66A of the Finance Act, 1994. Out of the said service tax liability, the appellant had discharged Rs. 15,11,96,359/- through cash and used Rs. 11,55,66,886/- utilizing their cenvat account. Alleging that in view of Rule 5 of the Taxation of Services (Provided from outside India and received in India) Rule....
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..... Thus, reading Rule 2(p) & (r) of Cenvat Credit Rules makes it clear that a person liable to discharge service tax is also considered as an output service provider including the recipient of service on whom the liability to pay service tax under reverse charge mechanism is placed. Since the appellant is required to discharge service tax on receiving services from Visa and Master Card situated abroad as per Rule 2(1)(d) of the Service Tax Rules read with Section 68(2) of the Act, hence, they should be considered as provider of taxable service under Rule 2(r) of the Cenvat Credit Rules. She has further submitted that Rule 5 of the Taxation of Services (Provided from outside India and received in India) Rules, 2006 is not applicable to the pr....
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....e India and received in India) Rules, 2006, the services received by the appellant shall not be treated as an output service for the purpose of availing cenvat credit. He has submitted that as per Rule 3(3)(e) of the Cenvat Credit Rules, 2004, cenvat credit can be utilized for payment of service tax on any output service. He has referred to Circular dated 19.4.2006 wherein it is clarified that services provided by foreign supplier to domestic customer is subject to tax as per international practice and the recipient is treated as deemed service provider for the purpose of payment of service tax. As per the department's view, the deeming provision has been created under Section 66A of Finance Act, 1994 and the appellant is paying service tax....
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....g Inds. Ltd. vs. CCE, Jaipur-I - 2015 (40) STR 320 (Tri.-Del.). Further, he has submitted that since the appellant did not pay the correct amount of service tax by wrongly utilizing the cenvat credit and failed to file appropriate ST-3 return, therefore, extended period of limitation is invokable. 5. Heard both sides and perused the records. 6. The limited issue involved in the present appeal for determination is: Whether the appellant, who received services from overseas service providers and discharged service tax under reverse charge mechanism, is eligible to utilize cenvat credit in discharging such service tax. We find that the fulcrum of the argument of the Revenue is on Rule 5 of the Taxation of Services (Provided from outsid....
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....e of M/s Kansara Modler Ltd. 2013 (32) STR 209 (TRI) has allowed the utilization of credit. The relevant portion of the order is as under : 4. We find in this case contention of Revenue is that appellant is a recipient of services and cannot be treated as provider of output service. Hence appellant cannot utilize Cenvat account for payment of service tax on services received from abroad. On the other hand appellant claims that they are provider of output service as per-definitions under Rule 2(p), Rule 2(q), Rule 2(r) of the Cenvat Credit Rules read under Rule 2(1)(d)(iv) of Service Tax Rules, 1994. 5. For sake of convenience we reproduce these Rules below :- (i) Rule 2(p) - "output service" means any taxable service, excluding the....