USV Ltd. v. CST

FINANCE ACT, 1994

--Levy of Service tax--Reverse charge mechanismAssessee availing services from outside India--Deemed service provider--Rule 5 of Taxation of Service Rules (Provided from outside India and Received in India) Rules only refers to availing of Cenvat credit and not utilization of Cenvat credit, therefore, there was no bar for utilization of Cenvat credit for the deemed service provider.--Assessees were liable to pay service tax under reverse charge basis being deemed service provider as they were availing services from outside India. Revenue alleged that the assessee had paid service tax on import of service through Cenvat Credit account which the assessee was not eligible and, therefore, it amounts to non-payment of tax. Assessee contended that the services provided from outside India and received in India, therefore, could not be treated as taxable service provided by the recipient for the purpose of Cenvat credit rules. Held: Under Cenvat Credit Rules, 2004, there was no bar for utilization of Cenvat credit for the deemed service provider to pay the service tax liability casted upon him in terms of section 66A. In terms of rule 2 (r), the assessee was a deemed service provider. Rule 5 of Taxation of Service Rules (Provided from outside India and Received in India) Rules only refers to availing of Cenvat credit and not utilization of Cenvat credit.