2011 (1) TMI 872 - AT - Service Tax

Cenvat credit - Goods Transport Agency (GTA)services - The respondents have played dual roles first as deemed service provider they paid the service Tax on GTA services availed by them. Second as service recipient they have taken credit of Service Tax paid on the GTA services which are input services for them - If the Service Tax on GTA service was paid by the provider based on the invoice issued by the said provider the Service Tax so paid shall be admissible as credit to the respondents. The credit payment mentioned in the invoice to be issued by the service provider shall be based on TR-6 challan/GAR-7 by which the said provider of services paid the Service Tax - In the present case as payer of Service Tax the respondents have used the TR-6 challan/GAR-7 for payment of Service Tax - The payment of Service Tax on the input service is not in dispute - The utilization of the input service by the respondents is also not in dispute - Decided in favour of assessee

Summary

Issues:
Appeal against Commissioner (Appeals) order upholding original authority's decision on denial of CENVAT credit for Service Tax paid on GTA services using TR-6 challans.

Analysis:
The appeal before the Appellate Tribunal CESTAT, CHENNAI involved a dispute regarding the denial of CENVAT credit for Service Tax paid on Goods Transport Agency (GTA) services using TR-6 challans. The respondents, manufacturers of MS Ingots, had availed GTA services for transporting inputs and paid Service Tax on these services using TR-6 challans. The department issued a show-cause notice proposing denial of credit amounting to Rs.1,48,345, arguing that TR-6 challans were not prescribed documents for CENVAT credit under Rule 9 of the CENVAT Credit Rules. The original authority, followed by the Commissioner (Appeals), ruled in favor of the respondents, prompting the department to file an appeal against these decisions.

The department contended that TR-6 challans/GAR-7 became permissible documents for CENVAT credit only after an amendment to the CENVAT Credit Rule with effect from 16.6.2005. On the other hand, the respondents' advocate supported the Commissioner (Appeals)'s decision. The Tribunal, under the judgment of M Veeraiyan, analyzed the dual role played by the respondents as both deemed service providers and service recipients. The respondents paid Service Tax on GTA services as providers and claimed credit for the same as recipients. The Tribunal emphasized that if the Service Tax on GTA services was paid by the provider, based on the invoice issued by them, the credit would be admissible. In this case, the respondents used TR-6 challans for payment, which was not in dispute. The Tribunal referenced the decision in the case of JSW Ltd. Vs Commissioner of Central Excise, Salem, and found no grounds in the appeal to challenge the applicability of that decision to the present case.

Ultimately, the Tribunal upheld the Commissioner (Appeals)'s decision, stating that there was no valid reason to interfere with the order. The appeal was rejected, and the judgment was dictated and pronounced in open court by M Veeraiyan.