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2011 (7) TMI 849 - HC - Service Taxwhether the manufacturer can take benefit of the CENVAT credit which it had obtained on the manufacturing side for discharging the Service Tax liability on account of Goods Transport Agency services rendered - Rule 3(4)(e) of the CENVAT Credit Rules, 2004 - In the present case also, the Service Tax was paid out of the CENVAT credit on GTA services and hence, the Respondents were well within their right to utilise the CENVAT credit for the purpose of payment of Service Tax - Appeals are dismissed
Issues:
Whether a person discharging Service Tax liability as a deemed service provider can utilize CENVAT credit for GTA services? Analysis: The core issue in this case was whether a person, not the actual service provider but discharging Service Tax liability on taxable services as a deemed service provider, could utilize CENVAT credit for Goods Transport Agency (GTA) services. The Tribunal had allowed the Assessee to use CENVAT credit for GTA services based on a previous decision in favor of the Assessee. The Revenue argued that CENVAT credit should not be used for services rendered and should be paid in cash. However, the Punjab and Haryana High Court, in a related matter, held that there was no legal prohibition on utilizing CENVAT credit for Service Tax on GTA services, as per CBEC's Excise Manual and Rule 3(4)(e) of the CENVAT Credit Rules, 2004. The Court affirmed the Assessee's right to pay Service Tax from CENVAT credit for GTA services, as upheld by the Commissioner (Appeals) and the Tribunal. The judgment emphasized that the Assessee, engaged in manufacturing, could indeed utilize CENVAT credit for payment of Service Tax on GTA services. The Court concurred with the reasoning of the Punjab and Haryana High Court, rejecting the Revenue's argument against using CENVAT credit for GTA services. It was concluded that the Assessee was within their rights to pay Service Tax from CENVAT credit for GTA services. Consequently, all appeals were dismissed, and no costs were awarded in the case.
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