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2011 (11) TMI 240 - AT - Service TaxUtilization of CENVAT credit on input services by recipient of GTA service - Commissioner (Appeals) vide his order dated 31.8.2009 has set aside order dated 25.2.2009 of the original authority in toto - Commissioner vide order dated 24.12.2009 chosen to modify the non-existing order-in-original dated 25.2.2009 by enhancing penalty Held that - Whether a recipient of GTA service, as a deemed service provider, can utilize the CENVAT credit while paying service tax due by them stands decided in favor of the assessee in the case of M/s Nahar Industrial Enterprises Ltd. & Ors.(2010 - TMI - 207889 - Punjab And Haryana High Court) As against the revisionary order of the Commissioner passed on 24.12.2009 enhancing the penalty is concerned, when the order-in-original dated 25.2.2009 stands already set aside by him on 31.8.2009. The Commissioner has chosen to exercise revisional jurisdiction in respect of an order which did not exist. On this ground alone, this order cannot be sustained. In view of the above, the order of the Commissioner (Appeals) dated 31.8.2009 is upheld and the order of the Commissioner dated 22.12.2009 is set aside.
Issues:
Appeal against order of Commissioner (Appeals) setting aside original authority's decision, Enhancement of penalty under Section 76, Utilization of CENVAT credit for service tax on GTA service, Legal question of deemed service provider's CENVAT credit utilization, Revisional jurisdiction exercised on a non-existing order. Analysis: 1. Appeal against Commissioner (Appeals) setting aside original authority's decision: The department filed an appeal against the Commissioner (Appeals) setting aside the original authority's decision regarding the utilization of CENVAT credit for service tax on GTA service. The Tribunal upheld the Commissioner (Appeals)'s decision, citing the legal provision that there is no restriction on utilizing excise duty credit for paying service tax. The Tribunal also noted the legal precedent favoring the assessee regarding deemed service providers' CENVAT credit utilization for service tax. 2. Enhancement of penalty under Section 76: The Commissioner enhanced the penalty under Section 76 in a revisional order, even though the original authority's decision had been set aside by the Commissioner (Appeals). The Tribunal found this revisional jurisdiction exercised on a non-existing order to be invalid, leading to the setting aside of the Commissioner's order and rejection of the department's appeal against the Commissioner (Appeals)'s decision. 3. Utilization of CENVAT credit for service tax on GTA service: The case involved a manufacturer availing CENVAT credit for discharging Central Excise duty and utilizing it for paying service tax on GTA services. The original authority held this utilization as illegal, resulting in the demand for service tax and imposition of a penalty. However, the Commissioner (Appeals) set aside this decision, and the Tribunal upheld this decision based on the legal provisions allowing such credit utilization. 4. Legal question of deemed service provider's CENVAT credit utilization: The Tribunal considered whether a deemed service provider, like the appellant in this case, could utilize CENVAT credit for paying service tax on services received. Citing legal precedents, including a decision by the Hon'ble High Court of Punjab & Haryana, the Tribunal ruled in favor of the assessee, allowing the utilization of CENVAT credit for service tax on GTA services. 5. Revisional jurisdiction exercised on a non-existing order: The Tribunal highlighted the invalidity of the Commissioner's revisional order enhancing the penalty under Section 76, as it was based on an order that had already been set aside by the Commissioner (Appeals). The Tribunal rejected the department's appeal against this revisional order, emphasizing the lack of merit in sustaining an order issued in such circumstances.
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