Whether, a service provider can be directed to pay differential service tax if the recipient of his service is found to have claimed credit in excess of that paid by the service provider? Facts:

SOS Enterprise vs. CCE&ST [2014] 43 taxmann .com 259 (Ahmedabad CETAT)

The Appellant provided services as direct selling agent to its principal and raised invoices on the principal for such services. In a proceeding against the principal, on verification of records, it was found that, the principal has taken the CENVAT Credit more than service tax actually paid by the Appellant' On this ground demand was confirmed against the Appellant to the extent of excess CENVAT Credit and penalties were imposed. The Appellant explained that the differences arise because the Appellant paid the service tax on "receipt basis", whereas the Principal may have taken the CENVAT Credit on the basis of invoice.

Held:

The Tribunal held that, if the department has to make out an offence case against the appellant, it is the responsibility of the department to show that the appellant had received the amount but did not pay the service tax. In the absence of any evidence to show that the Appellant has not paid the tax on the amount received and in the absence of specific allegation in the show cause notice or in the findings of the lower authorities, requirement of pre-deposit of taxes was waived.