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April 2014

[2014] 42 taxmann.com 396 (New Delhi – CESTAT) – Aksh Technologies Ltd. vs. CCE.

By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
Reading Time 2 mins
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Whether CENVAT credit can be disallowed in the hands of the service receiver on the ground that it was subsequently held that the input services were not liable to tax – Held, No.

Facts:
The three issues involved in this case were, (i) whether the appellant was required to pay Service tax on services received prior to 18-04-2006 when section 66A was introduced in the Finance Act, 1994 (ii) whether Service tax liability in such cases could have been discharged through the CENVAT credit (iii) whether the appellant could have taken credit of the Service tax paid by debiting the CENVAT account (since the services itself were not liable to Service tax).

Held:
The first two issues were decided in favour of the assessee relying upon the decision of Indian National Shipowners Association vs. Union of India [2009] 18 STT 212 (Bom.) and Nahar Industrial Enterprises Ltd. [2012] 35 STT 391 (Punj. & Har) respectively. As regards the third issue, the Hon’ble Tribunal held that, there was no dispute that the impugned services were input services and then in such circumstances, the credit taken under CENVAT Credit Rules cannot be disputed for the reason that later it was decided that the appellant need not have paid the service tax.

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