2011 (1) TMI 251 - AT - Service Tax

Demand of duty and Penalty - GTA service Input service - GTA service used for outward transportation from the factory gate to the buyers premises The submission that the GTA service used for outward transportation from the factory gate to the buyers premises should be treated as input service therefore has to be rejected. - no justification for sustaining the penalty on the appellant - appeal disposed of by upholding the demand of duty alongwith interest and setting aside the penalty

Summary

Issues:
Appeal against disallowance of cenvat credit for GTA services used in transporting cement to buyers on FOR basis.

Analysis:
1. Disallowed Cenvat Credit: The dispute revolved around whether GTA services utilized by the manufacturer in transporting cement to buyers on FOR basis could be considered as input service for claiming cenvat credit. The original authority disallowed the credit, citing that GTA services were not eligible as input services. The appellant argued that since the ownership and possession of the cement transferred at the buyers' premises, GTA services should be treated as input service.

2. Interpretation of Input Service: The appellant contended that the definition of input service is broad and encompasses activities related to the business, including transportation from the factory to the buyers' premises. They relied on legal precedents to support their argument, emphasizing that the transfer of possession and ownership at the buyers' premises should qualify GTA services as input service.

3. Place of Removal: The appellant argued that the buyers' premises should be considered the place of removal, thereby justifying the inclusion of GTA services as input service. However, the tribunal disagreed, stating that the extended meaning of place of removal did not align with the appellant's transaction, emphasizing that selling goods at buyers' premises was not equivalent to a doorstep sale scenario.

4. Valuation and Assessable Value: The tribunal addressed the relevance of valuation methods, highlighting that treating transportation as an input service could impact the assessable value, especially under Section 4 valuation. It was noted that including transportation costs in assessable value was not intended under Section 4.

5. Penalty Imposition: Despite upholding the demand for duty along with interest, the tribunal found no justification for sustaining the penalty imposed on the appellant. Consequently, the penalty was set aside, providing partial relief to the appellant.

In conclusion, the tribunal upheld the demand for duty and interest while setting aside the penalty, ruling against considering GTA services for outward transportation as input service in the context of the appellant's transactions. The judgment highlighted the nuanced interpretation of input services, place of removal, and the impact on assessable value, ultimately providing clarity on the eligibility of cenvat credit for GTA services in similar scenarios.