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April 2012

(2011) TIOL 748 HC-Kar.-ST — Commissioner of Service Tax v. Aravind Fashions Ltd.

By Puloma Dalal, Jayesh Gogri
Chartered Accountants
Reading Time 1 mins
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Service tax — Tax payable under reverse charge on services received from abroad — Tax can be paid from CENVAT credit account.

Facts:
The assessee had paid service tax as a receiver of intellectual property service using CENVAT credit on advertisements, manpower recruitment, repairs and maintenance, construction services, etc. The Tribunal held that though the assessee is a recipient of service in law, as the service provider is outside the country, the tax is levied on him. But to discharge such liability, he can use CENVAT credit which is to his credit. The Revenue filed appeal against the Tribunal’s order.

Held:
In law, though the person is a service recipient, he is treated as service provider and is levied tax. To discharge his liability, he is entitled to use the CENVAT credit available with him. The Tribunal was held justified in holding so. No merit was found in the appeal of the Revenue. The Revenue’s appeal for penalty was also dismissed as substantial question of law was decided in favour of the assessee.

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