2011 (2) TMI 461 - AT - Service Tax

Condonation of delay - whether CENVAT credit can be utilized for payment of service tax on GTA services - The basic contention of the Department is that recipients of GTA service are not output service providers and hence, they cannot utilize CENVAT credit for payment of service tax on GTA service - As such, as far as the period beyond 18-4-2006 is concerned, I hold that the appellant/respondent-assessees are not entitled to utilize CENVAT credit for payment of service tax on GTA service and therefore, the duty demand and demand of interest are justified - Appeal is disposed of

Summary

Issues:
Whether CENVAT credit can be utilized for payment of service tax on GTA services.

Analysis:
In a batch of 50 appeals, the issue revolved around the utilization of CENVAT credit for paying service tax on GTA services. The Department argued that recipients of GTA services cannot use CENVAT credit for this purpose, while the appellants contended that they should be deemed as output service providers under the law and thus entitled to pay service tax using CENVAT credit. The Tribunal referred to previous decisions and legal provisions to analyze the matter comprehensively.

The Tribunal noted that the delay in filing one of the appeals was condonable, and the appeal should not have been dismissed on that ground. Instead of remanding the matter, the Tribunal decided to address the issue on its merits, as it was similar to the other appeals in the batch. The period under consideration in most cases was up to 18-4-2006, with some cases extending beyond this date.

Referring to a decision by the Bangalore Bench of the Tribunal, the Tribunal observed that the recipients of GTA services could avail the benefit of CENVAT credit for paying service tax for the period up to 18-4-2006. However, for the period beyond this date, the Tribunal held that the appellants were not entitled to utilize CENVAT credit for service tax payment on GTA services. While the duty demand and interest were deemed justified for this period, the imposition of penalties from 19-4-2006 to 28-2-2008 was considered unjustified and set aside due to the disputed nature of the issue.

In conclusion, the Tribunal disposed of all 50 appeals by setting aside the tax demand, interest, and penalties for the period inclusive and up to 18-4-2006. For the period beyond 18-4-2006, the appellants were not allowed to use CENVAT credit for service tax on GTA services, with penalties imposed during this period being set aside due to the contentious nature of the issue. Additionally, all cross-objections filed by the assessee-respondents were also disposed of in line with the main judgment.