2011 (3) TMI 45 - AT - Service Tax

Waiver of pre-deposit - Demand of service tax and Education Cess with interest and imposed penalty - the benefit of CENVAT credit of the service tax paid on GTA service (input service) was allowed to the assessee for utilization in payment of service tax on the same kind of service availed as output service by way of a deeming legal fiction - Hence the assessee shall be no requirement of pre-deposit before the lower appellate authority - The appeal is disposed in favour of assessee.

Summary

Issues Involved:
1. Waiver of pre-deposit and stay of recovery of service tax, Education Cess, interest, and penalties.
2. Dismissal of appeal by Commissioner (Appeals) due to failure to pre-deposit.
3. Entitlement of CENVAT credit for service tax paid on GTA service.

Analysis:

Issue 1: Waiver of pre-deposit and stay of recovery
The applicant sought waiver of pre-deposit and stay of recovery concerning service tax, Education Cess, interest, and penalties. The Tribunal found the appeal fit for remand at that stage. After dispensing with pre-deposit, the appeal was taken up for consideration.

Issue 2: Dismissal of appeal by Commissioner (Appeals)
The appeal was against an order by the Commissioner (Appeals) dismissing the assessee's appeal due to non-compliance with the pre-deposit directive under Sec.35F of the Central Excise Act. The original authority confirmed the demand of service tax, Education Cess, interest, and imposed a penalty. The Commissioner (Appeals) dismissed the appeal without considering the case on merits, leading to the present appeal.

Issue 3: Entitlement of CENVAT credit
The main issue was whether the assessee was entitled to take CENVAT credit for the service tax paid on GTA service received and utilize it for the outward transportation of finished goods. The appellant cited precedents like CCE vs. M/s. Shri Tubes & Steels Pvt.Ltd. and M/s. Dhillon Kool Drinks & Beverages Ltd., where similar credits were allowed. The Tribunal noted that the High Court's judgment was followed in allowing CENVAT credit for service tax paid on input service for utilization in payment of service tax on output service.

The Tribunal set aside the orders of the lower authorities and directed the Commissioner (Appeals) to dispose of the appeal on merits in line with the established case law. The appellant was to be given a reasonable opportunity to be heard without the need for pre-deposit before the lower appellate authority. The appeal was disposed of accordingly, and the stay application was also addressed.