2011 (6) TMI 298 - AT - Service Tax

Recipient of GTA services - use of cenvat credit account for the purpose of paying service tax - service tax on GTA services availed by them as recipient - Commissioner has held that service tax in such a situation could be paid only by cash and not using cenvat credit account - Held that - issue decided in favour of the assessee by Hon ble High Court in the case of Nahar Industrial Enterprises Ltd (2010 -TMI - 207889 - PUNJAB AND HARYANA HIGH COURT) holding that the recipient of GTA services can utilize cenvat credit account for paying service tax, order set aside and appeal allowed.

Summary

Issues:
1. Whether the appellant, a manufacturer of paper products and recipient of GTA services, can use cenvat credit account for paying service tax on GTA services.
2. Interpretation of the Commissioner's order regarding the payment of service tax by cash or using cenvat credit account.
3. Comparison of the present case with the decision of the Hon'ble High Court of Punjab & Haryana in the case of CCE, Chandigarh vs. Nahar Industrial Enterprises Ltd.

Analysis:
1. The appeal pertains to the dispute over the utilization of cenvat credit account for paying service tax on GTA services availed by the appellants as recipients. The Commissioner had ruled that service tax in such cases must be paid by cash and not through the cenvat credit account, leading to the confirmation of the demand for service tax and imposition of a penalty.

2. The appellant's advocate relied on the judgment of the Hon'ble High Court of Punjab & Haryana in the case of CCE, Chandigarh vs. Nahar Industrial Enterprises Ltd., where it was held that recipients of GTA services can indeed utilize the cenvat credit account for paying service tax. This legal precedent was crucial in the argument put forth by the appellant.

3. The respondent, represented by the SDR, acknowledged that a previous appeal had been adjourned as the issue of utilizing the cenvat credit account in such situations was referred to the Larger Bench of the Tribunal in the case of Panchmahal Steel Ltd. vs. CCE, Vadodara-II. However, it was admitted that the facts of the present case aligned with those of the Nahar Industrial Enterprises Ltd. case, where the High Court had ruled in favor of the recipient's ability to use the cenvat credit account for service tax payment.

4. Considering the precedent set by the Hon'ble High Court of Punjab & Haryana in the Nahar Industrial Enterprises Ltd. case, which unequivocally allowed recipients of GTA services to utilize the cenvat credit account for paying service tax, the impugned order of the Commissioner was set aside. The appeal was allowed in favor of the appellant, with consequential relief to be provided as per the law.