The Kolkata bench of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) granted relief to Price Waterhouse Coopers Private Limited (PwC) by allowing CENVAT credit of service tax paid under Section 66A of the Finance Act, 1994.
The Respondent M/s. Price Waterhouse Coopers Private Limited (PwC) are engaged in providing “Management Consultancy Services” falling under Section 65(105) (r) of Finance Act, 1994. During the material period, the respondent had made payment of Service Tax to the tune of
Rs.4, 20, 21,467/- under Section 66A of Finance Act, 1994 and availed credit of the amount of Service Tax paid by them. Audit conducted on the books of accounts of the Respondent opined that the Respondent has availed the credit of service tax paid under Section 66A in contravention of Rule 3(1)(ix) of CENVAT Credit Rule, 2004. Accordingly, it was alleged that the Respondent has wrongly availed CENVAT Credit to the tune of Rs. 4, 20, 21,467/- (Including Cess).
A Show Cause Notice dated 19.06.2009 was issued to the Respondent demanding CENVAT Credit of input service availed and utilized by the Respondent during the material period, to the tune of Rs. 4,20,21,467/-(Including Cess) in terms of Section 73 of Finance Act, 1994 read with Rule 14 of CENVAT Credit Rule, 2004, along with interest and penalty. The said Notice was adjudicated by the Ld. Principal Commissioner vide the impugned order wherein the demands raised in the Notice were dropped. Aggrieved against the dropping of the demands, Revenue has preferred this appeal.
The respondent submitted that in respect the credit availed on the payment of service tax made after 18.04.2006, a specific provision was inserted in Rule 3 of CENVAT Credit Rules, 2004 allowing CENVAT credit of service tax paid under Section 66A of the Finance Act, 1994 and hence, there is no question of denial of credit availed after 18.04.2006.
In respect the credit availed on the payment of service tax made for the period prior to 18.04.2006, the Respondent submits that during this period, the law relating to taxability of import services was not settled; in view of the uncertainty that prevailed, they decided to pay service tax. It is submitted that once, service tax is paid on import of services and the same is accepted by the Department, then the credit of the same cannot be denied.
The bench observed that the respondent has paid Service Tax under Reverse Charge Mechanism in terms of Section 66A of Finance Act, 1994, and has availed CENVAT Credit against such payments of Service Tax during the period from 2004-05 to 2007-08. In the impugned order, the adjudicating authority has dropped the demands raised in the Notice and allowed the CENVAT Credit availed by the Respondent. Aggrieved against the dropping of the demands, Revenue has preferred this appeal.
In respect the credit availed by the respondent on the payment of service tax made after 18.04.2006, further observed that a specific provision has been inserted in Rule 3 of the CENVAT Credit Rules, 2004, allowing CENVAT Credit of service tax paid under Section 66A of the Finance Act, 1994. Hence, the tribunal observed that the CENVAT Credit availed by the Respondent for the period after 18.04.2006 is legal and proper.
Regarding the credit availed on the payment of service tax made for the period prior to 18.04.2006, we observe that the law relating to taxability of import services was not settled during that period. However, the Respondent decided to pay service tax to avoid any disputes. Once, service tax is paid by the Respondent on the import of services and the same was accepted by the Department, then the credit of the same cannot be denied.
The Coram of Ashok Jindal (Judicial member) and K. Anpazhakan (Technical member) held that the Respondent was eligible to avail the credit of service tax paid under Section 66A during the period from 2004-05 to 2007-08. Accordingly, CESTAT upholds the impugned order and rejects the appeal filed by the Revenue.
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