2011 (9) TMI 362 - AT - Service Tax

Utilising the modvat credit on payment of duty on the GTA services - denial by lower authorities because receipt of GTA services cannot be considered to be output services though under deemed fiction of law the appellant is required to pay service tax on the same - Appelant contended that there is duplication of the period involved in both the appeals which needs rectification - Revenue contended that law was amended with effect from 19.4.2006 and deemed status of service provider given to the service receiver in terms of provisions of Rule 2(9) was taken away - Held that remand both the appeals to the original adjudicating authority - adjudicating authority would also consider the appellants grievances of overlapping period and their liability to pay taxes for the period

Summary

Issues involved:
1. Entitlement to use modvat credit on GTA services
2. Applicability of decisions on deemed service provider status
3. Rectification of duplication in period involved
4. Availability of credit post April 2006

Analysis:
1. The main issue in the present appeals is whether the appellant can utilize modvat credit on payment of duty for GTA services received. Lower authorities denied this utilization, arguing that GTA services cannot be considered output services, even though the appellant is required to pay service tax on them under deemed fiction of law. The Tribunal previously settled this issue in the case of CCE vs. Nahar Industries Enterprises Ltd., a decision confirmed by Punjab & Harayana High Court.

2. The period under consideration in the appeals is from October 2005 to July 2006 and February 2006 to July 2006. The appellant's advocate pointed out a duplication of the period in both appeals, seeking rectification. The Departmental Representative (DR) argued that the law was amended from 19th April 2006, removing the deemed service provider status for the service receiver as per Rule 2(9). The DR relied on the Supreme Court's decision in Maruti Suzuki Ltd. case and the Tribunal's decision in ITC Ltd. vs. CCE, Guntur.

3. The appellant's advocate contended that even after April 2006, the credit utilization should be available. However, he acknowledged that this issue was not raised before the lower authorities. Considering all facts, the Bench set aside the impugned orders and remanded both appeals to the original adjudicating authority to determine the appellant's liability to service tax based on the Tribunal's and Punjab & Haryana High Court's decisions. The authority was instructed to address the issue of overlapping periods in the appeals and the liability for taxes post 17th April 2006, as per the DR's cited decisions.