General Manager, BSNL Vs. Commissioner of Central Excise, Lucknow [(2014) 48 taxmann.com 35 (New Delhi – CESTAT)]
General Manager, BSNL (the Appellant) took credit of Service tax based upon invoices issued by service provider on March 7, 2007. The credit was availed on March 31, 2007 only after making payment to the service provider. The Department argued that the credit was availed in the month of March, 2007 whereas the service provider has deposited the Service tax only in April and May, 2007. Therefore, the same was denied.
The Appellant filed an appeal to the Commissioner (Appeals) wherein also the credit was denied by holding that:
Being aggrieved, the Appellant preferred an appeal before the Hon’ble CESTAT, Delhi.
It was held by the Hon’ble CESTAT, Delhi, that for the purpose of availing Cenvat credit, there is no requirement that the Service tax should have been deposited by the service provider before the availment of the credit. In terms of Rule 4(7) of the Credit Rules, the Cenvat credit in respect of input service shall be allowed, on or after the day on which payment is made of the value of input service and the Service tax paid or payable as is indicated in the invoice.
It was further held by the Hon’ble Tribunal that if the service provider has not deposited the Service tax with the Department on due date, then the Revenue’s remedy lies at the end of the service provider for recovery of the Service tax along with interest. Thus, the Appellant’s availment of Cenvat credit was held to be in order.
(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email: firstname.lastname@example.org)