2011 (4) TMI 1307 - HC - Income Tax

Summary

Issues involved: Appeal against tribunal's judgement on cenvat credit for service tax paid on GTA service for onward transportation and place of removal of goods.

Cenvat credit on service tax paid on GTA service: The High Court considered whether the assessee was entitled to avail Cenvat credit on the service tax paid on GTA service for outward transportation of goods beyond the place of removal. The Court analyzed the definition of 'input service' under the Cenvat Credit Rules, 2004, which includes services used directly or indirectly in the manufacture of final products and clearance of final products from the place of removal. The Court held that outward transportation service qualifies as an input service as it is used for the clearance of final products from the place of removal. The Court emphasized that the expression 'includes' in the definition should not be used to limit the scope of services covered by the term 'input service'. Consequently, the Court dismissed the tax appeal based on the common issues involved.

Judgement: The High Court upheld the tribunal's decision regarding the entitlement of the assessee to avail Cenvat credit on service tax paid on GTA service for outward transportation of goods beyond the place of removal. The Court's interpretation of the definition of 'input service' under the Cenvat Credit Rules, 2004 supported the inclusion of outward transportation service as a qualifying service for Cenvat credit. The Court emphasized the broad and expansive nature of the definition, stating that the expression 'includes' should not be used to restrict the scope of services covered by the term 'input service'. As a result, the tax appeal was dismissed by the Court.