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There is only one charging section in service tax i.e. section 66 and section 66A is only a deeming provision. Therefore when tax is paid u/s. 66, credit is admissible. Further when the tax is not required to be paid, credit is nothing but refund of the tax erroneously paid.
Facts
The Appellant paid service tax on commission paid by them to the foreign commission agents for the period January 2006 to April 2010 under the provisions of the Act read with Rule 2(1)(d)(iv) of the Service Tax Rules, 1994 and availed CENVAT credit of such amount. The department denied the credit on the ground that section 66A creating a charge of service tax on services received from outside India by a person in India is not specified in Rule 3 of the CENVAT Credit Rules, 2004. The Commissioner allowed credit for the period from 18/04/2006 i.e. from retrospective insertion of section 66A in Rule 3 of the Rules. Being aggrieved by the order the present appeal is filed.
Held
In respect of omission of section 66A in Rule 3(1), the Tribunal noted that there is only one charging section i.e. section 66. Section 66A is merely a deeming provision and is not a charging section which is also made clear by circular 354/148/2009-TRU dated 16/07/2009 wherein it is provided that “provisions under section 66A state………….. and accordingly all the provisions of Chapter V of the Finance Act, 1994 would apply. Therefore, it is clear that section 66A is not a charging section by itself. The charging section remains section 66 even for the services imported. In other words, the tax collected from the recipient in terms of section 66A is also tax chargeable under section 66”. Further, the said circular provides that there is no mistake or omission in the relevant provisions of CENVAT Credit Rules, 2004 and credit should be allowed if they are in the nature of input services. Further, while allowing the credit it was held that when tax itself was not required to be paid prior to 18/04/2006 the credit is nothing but a refund of the tax erroneously paid. Further, it was held that extended period cannot be invoked as the credits were reflected in the ER-1 returns and the matter involved interpretation of statutory provisions.
