2009 (8) TMI 724 - AT - Service Tax

GTA Service cenvat credit utilized for payment of service tax on GTA service - Commissioner (Appeals) stated that the Appellant is liable to pay Service Tax in cash Held that - Commissioner (Appeals) has not taken into consideration the contentions of Appellant in respect of the provisions of Cenvat Credit Rules and the Service Tax Rules mater remanded to Commissioner - Appeal is allowed

Summary

Issues:
1. Interpretation of Cenvat Credit Rules and Service Tax Rules regarding the utilization of credit for payment of Service Tax on Output Service.
2. Applicability of Board's Circular dated 23-8-2007 in determining liability to pay Service Tax from CENVAT Credit Account for GTA Service received.

Analysis:
1. The Appellant, a manufacturer of excisable goods and recipient of GTA Service, contended that as a person liable to pay Service Tax for the GTA Service received, they should be able to utilize Cenvat credit for payment. They argued that the Cenvat Credit Rules allow credit utilization on Output Service, which includes services provided by a person liable to pay Service Tax. The Appellant highlighted that the Commissioner (Appeals) solely relied on the Board Circular without considering these contentions. The Tribunal found merit in the Appellant's argument, emphasizing that the Commissioner should have considered the provisions of Cenvat Credit Rules and Service Tax Rules. Therefore, the Tribunal set aside the impugned Order and remanded the matter for fresh consideration by the Commissioner (Appeals) after providing an opportunity for the Appellant to be heard.

2. The Revenue contended that the Appellant, as a recipient of GTA Service and not a provider, should not be allowed to utilize Cenvat credit for Service Tax payment on Output Service. However, the Tribunal noted that the Commissioner (Appeals) did not adequately consider the Appellant's arguments regarding the applicability of Cenvat Credit Rules and Service Tax Rules. The Tribunal held that the Commissioner should have taken into account these rules instead of solely relying on the Board Circular. Consequently, the Tribunal allowed the Appeal by remanding the matter for fresh consideration, directing the Commissioner (Appeals) to reevaluate the case in light of the relevant legal provisions and after hearing the Appellant.

In conclusion, the Tribunal found that the Commissioner (Appeals) erred in not considering the provisions of Cenvat Credit Rules and Service Tax Rules while relying solely on the Board Circular. The Tribunal emphasized the need for a thorough reevaluation of the case based on the legal framework governing Cenvat credit utilization and Service Tax payment on Output Service.