2011 (5) TMI 66 - AT - Service Tax

Utilisation of Cenvat credit - GTA services - Appellant discharge the service tax on the GTA services received by them using the Cenvat credit available in their books of accounts - Revenue has contended that the respondents cannot pay the service tax from the Cenvat credit availed by them - As per Rule 3(4)(e) of the Cenvat Credit Rules, 2004 and para 2.4.2 of CBEC s Excise Manual of Supplementary Instructions shows that there is no legal bar to the utilisation of Cenvat credit for the purpose of payment of service tax on the GTA services - Hence, the question of law posed in these appeals is answered in favour of the assessee and against the revenue.

Summary

Issues involved: Eligibility to discharge service tax on GTA services using Cenvat credit.

Detailed Analysis:

1. Issue of Eligibility to Discharge Service Tax:
The appeal was directed against Order-in-Appeal No.533(RKS)CE/JPR-II/2007, concerning the eligibility of the appellant to discharge service tax on GTA services using the Cenvat credit available in their books of accounts. Both lower authorities had held that as the recipient of GTA services, the appellant could not be considered a provider of output services and thus could not utilize the Cenvat credit balance. The appellant's counsel cited a judgment by the Hon'ble High Court of Punjab & Haryana in the case of CCE, Chandigarh Vs. Nahar Industrial Enterprises Ltd., supporting the appellant's eligibility to avail Cenvat credit for service tax on Goods Transport Agency services.

2. Judgment Analysis:
After hearing both sides, the Tribunal considered the submissions and referred to the judgment of the Hon'ble Punjab & Haryana High Court. The Court had upheld the Tribunal's view that there was no legal bar to utilizing Cenvat credit for paying service tax on GTA services, as per CBEC's Excise Manual of Supplementary Instructions and Rule 3(4)(e) of the Cenvat Credit Rules, 2004. It was noted that the service tax on GTA services had been paid from the Cenvat credit in this case, and therefore, the respondents were within their rights to use the credit for this purpose. The Commissioner (Appeals) and the Tribunal were found to have rightly held that the respondents were entitled to pay the service tax from the Cenvat credit. Consequently, the question of law was answered in favor of the assessee and against the revenue, leading to the dismissal of the appeals. The impugned order was deemed unsustainable and set aside, with the appeal being allowed in favor of the appellant.

In conclusion, the judgment clarified the eligibility of the appellant to discharge service tax on GTA services using Cenvat credit, based on legal provisions and precedents. The decision highlighted the permissibility of utilizing Cenvat credit for service tax payments and upheld the appellant's right to do so in this case, ultimately ruling in favor of the appellant and dismissing the appeals against them.