COMMISSIONER OF SERVICE TAX, BANGALORE Vs. ARAVIND FASHIONS LTD.

JUDGEMENT

(1.) The Revenue has preferred these appeals challenging the order passed by the Tribunal holding that the service tax on said deemed output service can definitely be paid by utilizing the Cenvat credit on input services.

(2.) The assessee is a Company incorporated in the manufacture and sale of ready made garments bearing the brand names like 'Wrangler' and 'Lee' which belong to foreign Companies. The foreign Companies provided Intellectual Property Service (IPS) with effect from 10.9.2001 to the assessee and the assessee Company being the service provider was made liable to pay service tax in terms of Section 68(2) of the Finance Act 2(1)(d)(iv) of the Service Tax Rules, 1994. The Service Tax liability was discharged by the assessee using Cenvat credit availed on 'Intellectual Property Service' which was objected to by the Department. The assessee filed a revised returns and used credit relating to other input services such as advertisement, freight, manpower recruitment, courier services, maintenance, repair and construction services for discharging Service Tax under the category of Intellectual Property Service' in the capacity of the service receiver. The Revenue proceeded against the assessee on the ground that Cenvat was wrongly used for paying Service Tax on Intellectual Property Service' purported service when he is not a service provider but the receiver of service. Therefore overruling the objections of the assessee the demand was confirmed. Aggrieved by the said order the assessee preferred an appeal to the Tribunal The Tribunal held that though the assessee is a recipient of services in law as the service provider is outside the country he is deemed to be the service provider and tax is levied on him. But to discharge that liability he can use the Cenvat credit which is to his credit and therefore they set aside the order passed by the Commissioner. Aggrieved by the said order the Revenue is in appeal.

(3.) Heard counsels.