2011 (8) TMI 113 - AT - Service Tax

Refund - cenvat credit - GTA services for outward transportation and utilising the same for payment of Central Excise duty - High Court of Karnataka in COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX BANGALORE Versus M/s ABB LTD. and others reported in (2011 -TMI - 203985 - KARNATAKA HIGH COURT) upheld the view taken by the Tribunal and held that up to 01.4.2008 when the definition of input service was amended credit of service tax paid on GTA services is admissible - Decided in favour of the assessee

Summary

Issues:
1. Availment of cenvat credit on GTA services for outward transportation.
2. Refund claim allowed by Commissioner (Appeals) based on Tribunal's decision in India Cements Limited.
3. Interpretation of definition of input service in the context of business requirements.
4. Admissibility of cenvat credit on service tax paid on GTA services for outward transportation.

Analysis:
1. The case involved the availing of cenvat credit amounting to Rs. 2,91,597/- on GTA services for outward transportation during June 2006 to March 2007. The respondents utilized this credit for payment of Central Excise duty, following advice from the department. Subsequently, a refund claim was filed by the respondents, which was allowed by the Commissioner (Appeals) based on the Larger Bench decision of the Tribunal in the case of India Cements Limited.

2. The Commissioner relied on the Tribunal's decision in India Cements Limited, which interpreted the definition of input service in a manner that aligns with business requirements, rather than restrictively. This interpretation was further supported by the Tribunal's decision in the case of ABB Limited, where it was held that cenvat credit on service tax paid on GTA services for outward transportation is admissible.

3. The Revenue appealed against the Commissioner's decision, arguing that the interpretation of input service was incorrect. However, the Hon'ble High Court of Karnataka upheld the Tribunal's view, stating that until the amendment of the definition of input service on 01.4.2008, credit of service tax paid on GTA services was admissible. Given the alignment of the Tribunal's decision with the High Court's ruling, the appeal by the Revenue was deemed to lack merit and was rejected.

4. In conclusion, the Tribunal, in line with the decision of the Hon'ble High Court of Karnataka and its own Larger Bench, affirmed the admissibility of cenvat credit on service tax paid on GTA services for outward transportation. The appeal filed by the Revenue was consequently rejected based on the established legal precedents and interpretations of the relevant provisions.