2011 (7) TMI 141 - AT - Service Tax

Credit of service tax paid on inputs services - Clause (ii) of Rule 2 (i) of Cenvat Credit Rules - GTA service is used for transportation of goods up to the place of removal - As per the Tribunal in the case of ABB Limited 2009 (5) TMI 48 - CESTAT, BANGALORE and Larger Bench of this Tribunal held that credit is admissible - The Hon ble High Court took a view that the definition of input services was amended with effect from 01.04.2008 by substituting the word up to in place of from in clause (ii) of Rule 2 (i) of Cenvat Credit Rules making the intention clear i.e. whether inward transportation of input of capital goods or clearance of final product up to place of removal, any service rendered and service tax paid, would fall within the definition of input service - Such amendment made effective from 01.4.2008, transportation charges incurred by the manufacturer for clearance of final products from the place of removal has to be treated as included in the definition of input services - Decided in favour of assessee.

Summary

Issues:
- Admissibility of credit of service tax paid on GTA Services for transportation of goods beyond the factory gate.

Analysis:
1. The appeals before the Appellate Tribunal CESTAT, Ahmedabad, involved a common issue regarding the admissibility of credit of service tax paid on GTA Services for transportation of goods beyond the factory gate. The Revenue appealed against the decision of the Commissioner (Appeals) allowing the credit of service tax in such cases.

2. The Revenue contended that credit of service tax on input services is only available when GTA services are used for transportation of goods up to the place of removal, which, in these cases, was argued to be the factory gate. As the credit was taken for transportation beyond the factory gate up to the buyer's premises, the Revenue argued that such credit was not admissible.

3. The Tribunal referred to the decision of the Larger Bench in the case of ABB Limited, where it was held that credit for transportation charges incurred by the manufacturer for clearance of final products from the place of removal was included in the definition of input services. This interpretation was supported by the Hon'ble High Court of Karnataka in the same case, which emphasized the amendment in the definition of input services effective from 01.04.2008, clarifying the inclusion of transportation charges up to the place of removal.

4. Additionally, the Hon'ble High Court of Gujarat in the case of Parth Poly Wooven Limited also supported the view that transportation charges for clearance of final products from the place of removal were included in the definition of input services. Given the clarity provided by these High Court decisions and the fact that the period in question in these cases was before the 2008 amendment, the Tribunal rejected all appeals filed by the Revenue.