2013 (12) TMI 1630 - HC - Service Tax

Whether the respondent/assessee is liable to pay service tax in the form of cash and also as to whether the respondent is entitled to utilise Cenvat Credit for paying service tax? Held that - the respondent/assessee is not liable to pay service tax in the form of cash and also entitled to utilise Cenvat credit for the purpose of paying tax - reliance placed in the case of Commissioner of Service Tax Versus Hero Honda Motors Ltd. 2012 (12) TMI 734 - DELHI HIGH COURT , where it was held that there is no legal bar to the utilisation of Cenvat credit for the purpose of payment of service tax on the GTA services. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Whether the respondent is liable to pay service tax in cash and can utilize Cenvat credit for paying service tax.

Analysis:
1. The case involves appeals against the order of the Customs, Excise and Service Tax Appellate Tribunal, where the respondent, engaged in producing cotton yarn, was directed to pay service tax in cash despite having Cenvat credit facilities available. The Department challenged the Tribunal's decision allowing the respondent to use Cenvat credit for paying service tax.

2. The substantial questions of law raised included the correctness of the Tribunal's reliance on a previous decision and whether the respondent could be considered an "output service" provider under the Cenvat Credit Rules, 2004. The Tribunal's decision was based on the explanation to Rule 2(p) of the Cenvat Credit Rules, 2004, which defines "output service."

3. The appellant argued that the Tribunal's decision was irrelevant to the present case, seeking to set aside the Tribunal's orders. However, the respondent relied on precedents where similar matters were decided in favor of the assessee, allowing the use of Cenvat credit for paying service tax instead of cash.

4. Referring to previous judgments, the respondent contended that the Tribunal's decision was correct, emphasizing that the respondent was not liable to pay service tax in cash and could utilize Cenvat credit for tax payment. Consequently, the respondent argued that the appeals lacked substance and should be dismissed.

5. Ultimately, the Court dismissed the Civil Miscellaneous Appeals, upholding the Tribunal's decision that the respondent was not required to pay service tax in cash and could use Cenvat credit for tax payment. The Court found no grounds for interference, based on the precedents cited and the legal provisions governing the matter.