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August 2016

[2016-TIOL-1507-CESTAT-MAD] M/s JAKG Communications Pvt. Ltd vs. Commissioner of Central Excise, Chennai-III

By Puloma Dalal, Jayesh Gogri, Mandar Telang; Chartered Accountants
Reading Time 1 mins
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There is no provision for reversal of CENVAT credit availed in respect of output services for which the amount to be realized is written off as bad debt.

Facts
In the course of provision of service certain amount receivable from the recipient of service could not be realized by the Appellant. Revenue contended that on the amount not realized CENVAT credit is to be reversed.

Held
The Tribunal noted that there is no mandate in the statute for reversal of the CENVAT credit already availed in respect of the output service provided and the consideration thereof not realized for which such receivable amount is written off as bad debt, thus the Appellant cannot be directed to reverse proportionate CENVAT credit. Law is well settled that where tax paid has gone into the treasury, credit thereof should be available unless there is a fraud involved. Thus the appeal is allowed.

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