2012 (6) TMI 212 - AT - Service Tax

Stay - Pre-deposit - denial of benefit of Cenvat Credit of duty paid on the capital goods as also credit of tax paid on input services - alleged that inasmuch as the capital goods were not installed at Hazira and the input services were not availed at Hazira, the credit so availed by Hazira in respect of capital goods installed at Vaghodia and services availed at Vaghodia, was not in accordance with the provisions of Cenvat Credit Rules Held that - in the case of BSNL (2010 - TMI - 205047 - CESTAT, CHENNAI - Service Tax) held that M/s. BSNL, as a whole, is a service tax assessee, though its different has taken Service Tax registration at different places, prima facie, they are eligible to take credit in respect of capital goods received at Secondary Switching area, station at Vaghodia is a technical necessity so as to boost the pressure of the gas for further transportation to the ultimate place. Inasmuch as the said Vaghodia station is also a part of the same M/s. GAIL, who are discharging their Service Tax liability on the entire activity of transportation of the gas through pipeline, appellant is entitled to avail Cenvat Credit of duty paid on the capital goods or input services availed in respect of their Vaghodia station, pre-deposit of duty, interest and penalty waived and Stay Petition allowed

Summary

Issues:
- Dispensing with the condition of pre-deposit of confirmed amount against the appellant
- Allegations of improper availing of Cenvat Credit by the appellant
- Dispute regarding the installation of capital goods and availing of input services at different locations
- Technical necessity of the Vaghodia station for gas transportation
- Applicability of Cenvat Credit rules and relevant case laws

Analysis:

1. The primary issue in this case was the appellant's request to dispense with the pre-deposit condition of a substantial amount confirmed against them. The confirmed amount was related to the denial of Cenvat Credit for duty paid on capital goods and tax paid on input services, along with an imposed penalty of an identical amount.

2. The allegations against the appellant, a gas provider, centered around the improper availing of Cenvat Credit for capital goods and input services at different locations. The Show Cause Notice highlighted that the appellant had taken credit for goods and services not directly related to their primary operations at Hazira, leading to the confirmation of the amount in question.

3. The dispute further delved into the technical aspects of gas transportation, emphasizing the necessity of compressor stations like the one at Vaghodia for maintaining pressure and volume during the pipeline supply process. The appellant argued that the Vaghodia station's role was crucial for efficient gas transportation, despite not directly generating revenue through service tax payments.

4. The Tribunal considered relevant case laws, such as the BSNL cases, where the issue of credit availed at different locations was examined. These precedents highlighted the importance of the technical nature of services provided and the overall tax liability of the entity, supporting the appellant's claim for Cenvat Credit in this scenario.

5. Ultimately, the Tribunal found that the appellant, as a whole entity liable for service tax on gas transportation services, was entitled to avail Cenvat Credit for the capital goods and input services related to the Vaghodia station. The technical necessity of the station and the appellant's overall tax compliance supported the decision to dispense with the pre-deposit condition and allow the Stay Petition unconditionally.

6. The judgment, delivered by Ms. Archana Wadhwa, Member (J), on 17-6-2011, emphasized the technical and tax compliance aspects of the case, providing a favorable ruling for the appellant based on the specific circumstances and legal precedents cited during the proceedings.