2011 (10) TMI 347 - AT - Service Tax

Appellant manufacturer of casting of Iron & Steel - Availed GTA Services - Revenue argued recipient are not GTA thus cannot utilize the Cenvat Credit for payment of service tax on Goods - Held That - In view of Shri Tubes & Steels (2010 -TMI - 208724 - CESTAT, BANGALORE) the appellants are entitled to pay service tax through Cenvat Credit account for the period prior to 19.4.2006 and thus appeal prior to 19.4.06 are allowed and thereafter in cash.

Summary

Issues involved:
Common issue in four appeals - Utilization of Cenvat Credit for payment of service tax on Goods Transport Agency service.

Analysis:

Issue 1: Utilization of Cenvat Credit for payment of service tax on Goods Transport Agency service
The case involved the question of whether Cenvat Credit could be used for paying service tax on Goods Transport Agency service. The appellant, a manufacturer availing Cenvat Credit, argued that they were entitled to use the credit for this purpose based on the deeming provisions of the rules. They contended that the definition of output service allowed them to utilize the credit even if they did not directly provide the service. They cited relevant case law to support their position. On the other hand, the Revenue argued that service tax on such services should be paid in cash and not through Cenvat Credit, citing a specific case. The Tribunal examined the issue and referred to previous decisions, including one where it was held that prior to 19.4.2006, service tax on Goods Transport Agency service could be paid through Cenvat Credit account. The Tribunal emphasized the explanation clause, which deemed the recipient of service liable to pay service tax as an output service provider. For the period beyond 18.4.2006, the Tribunal noted that the explanation was withdrawn, leading to a different conclusion. It held that for this later period, the appellants were not entitled to use Cenvat Credit for paying service tax on Goods Transport Agency service. However, it deemed the imposition of penalties unjustified for this later period, and directed the original authority to reassess the service tax amount payable for that period.

Conclusion:
The Tribunal allowed three appeals for the period before 19.4.2006, permitting the use of Cenvat Credit for service tax payment on Goods Transport Agency service. In the fourth appeal, covering the period from 1.4.2006 to 30.9.2006, the penalties were set aside, and the service tax amount was to be recalculated for the period after 19.4.2006.