K.S. Jhaveri, J. - (1.) By way of this appeal, a challenge is given to the order dated 3-42013 [2013 (32) S.T.R. 209 (Tribunal)] passed by Learned Customs, Excise and Service Tax Appellate Tribunal, New Delhi whereby the appeal has been allowed.
(2.) This Court while admitting the appeal, on 27-10-2014 framed following substantial question of law : "Whether the Customs, Excise and Service Tax Appellate Tribunal, Principal Bench, New Delhi under its order dated 11th April, 2013 is right in arriving at the conclusion that the assessee was required to be treated as Output Service Provider and, therefore, was entitled to have relaxation of CENVAT credit irrespective of the provisions of Rule 5 of the Rules of 2006?"
(3.) Counsel for the appellant contended that the Tribunal has committed serious error while observing that :- "4. We find in this case contention of Revenue is that appellant is a receipt of services and cannot be treated as [provider] of Output service. Hence appellant cannot utilize Cenvat account for payment of service tax on services received from abroad. On the other hand appellant claims that they are provider of output service as per definitions under Rule 2(p), Rule 2(q), Rule 2(r) of the Cenvat Credit Rules under Rule 2(1)(d)(iv) of Service Tax Rules, 1994. 5. For sake of convenience, we reproduce these Rules below :- (i) Rule 2(p) - "output, service" means [any taxable service, excluding the taxable service referred to in sub-clause (zzp) of clause (105) of Section 65 of the Finance Act, provided by the provider of taxable service], to a customer, client, subscriber, policy holder or any other person, as the case may be, add the expressions 'provider' and 'provided' shall be construed accordingly; (ii) Rule 2(p) - "person liable for paying Service Tax" has the meaning as assigned to it in clause (d) of sub-rule (1) of Rule 2 of the Service Tax Rules, 1994; (iii) Rule 2(r) - "provider of taxable service" include a person liable for paying service tax; (iv) in relation to any taxable service provided or to be provided by any person from a country other than India and received by any person in India under Section 66A of the Act, the recipient of such service;] 6. If we read Rule 2(q) of Cenvat Credit Rules with Rule 2(1)(d)(iv), we find that appellant is a person liable to Service Tax. Once appellant is person liable to service tax, he becomes provider of taxable service under Rule 2(r) and consequently becomes output service provider under Rule 2(p) of the Cenvat Credit Rules. Revenue is also relying on Rule 5 of Taxation of Services (provided from outside India and received in India) Rules. We find that Rule 5 refers to availing of Cenvat credit and not to utilization of credit. We are therefore of the view that the finding of the Commissioner not treating the appellant as output service provider, is not correct and accordingly we set aside the impugned order and allow the appeal." ;