The Delhi CESTAT has allowed the CENVAT credit on taxi operators paying service tax.
The appellant is a Tour Operator and is registered as such with the Service Tax Department and it has been paying service tax on the taxable services which it provided. Its business mainly consists of organising tours for foreign tourists to
India. In order to provide this service, the appellant uses the services of taxis and the operators of these taxis paid service tax and recovered it along with their service charges from the appellant. The appellant availed CENVAT credit of the service tax so paid and utilised it in paying service tax on its output service. It is undisputed that the appellant was filing its Service Tax Returns.
There is no dispute that the appellant is provided tour operator services and has been paying service tax on the services and has been filing ST-3 returns. To provide these services, the appellant hires taxis. Thus, the services of the taxi operators are the input services to the appellant.
The taxi operators were paying service tax on their services considering themselves liable to pay service tax and the appellant has been taking CENVAT credit of such service tax. To charge service tax again on reverse charge basis from the appellant (the service recipient) would result in double taxation on the same service.
The CESTAT held that if the appellant had paid service tax under reverse charge mechanism, it would have been entitled to CENVAT credit on it immediately because it is its input service. Thus, the entire exercise is revenue neutral and in such a situation, the appellant cannot be alleged to have had an intent to evade payment of service tax.
Case Name: Incredible Indian Moments Pvt. Ltd. V/s Commissioner (Appeals) and Additional Director General, DGGSTI