2012 (8) TMI 442 - AT - Central Excise

GTA Services - dis-allowance of cenvat credit of the service tax paid on GTA Services under reverse charge mechanism - period March 2007 and thereafter - Held that - It is found that prior to 01.03.08 any service tax paid by the assessee under reverse charge mechanism on GTA services, was eligible for availment of cenvat credit. Reliance placed on Nahar Industrial Enterprises (2010 (5) TMI 608 - PUNJAB AND HARYANA HIGH COURT ). However, in respect of period post 01.03.08, since definition of the output services has undergone a change, and there is no specific quantification post 01.03.08 in the material period in this appeal, matter remanded back for only limited purpose of quantifying the amount of service tax credit availed by the appellant during the period 01.03.08 to 31.03.08. The appellant is required to reverse the said amount immediately as soon as being informed to him by the authority along with interest. Penalty - Since the issue involved in this case is a question of interpretation, no penalties are liable to be imposed on the appellant as major portion of the demand has been set aside.

Summary

Issues:
- Availment of cenvat credit on GTA services under reverse charge mechanism.
- Interpretation of the definition of output services pre and post 01.03.08.
- Effect of the High Court decision on cenvat credit entitlement.
- Quantification of service tax credit availed post 01.03.08.
- Imposition of penalties based on the interpretation issue.

Analysis:
1. The appellant contested the disallowance of cenvat credit on service tax paid for GTA Services under reverse charge mechanism. The revenue authorities argued that the credit cannot be availed as the services were not used for output services or manufacturing activities.

2. The appellant cited a decision by the Hon'ble High Court of Punjab & Haryana in Nahar Industrial Enterprises Ltd., asserting that the issue was settled. The Tribunal noted the change in the definition of output services pre and post 01.03.08, emphasizing that prior to this date, service tax paid under reverse charge on GTA services was eligible for cenvat credit.

3. The Tribunal referenced the Division Bench's decision in Shree Rajasthan Syntex Ltd., which relied on the Nahar Industrial Enterprises case, stating that the issue was no longer res-integra. However, for service tax credit availed post 01.03.08, the amendment to the definition of output services would impact the credit availed.

4. The Tribunal directed the matter back to the adjudicating authority to quantify the service tax credit availed by the appellant during the period 01.03.08 to 31.03.08. The appellant was instructed to reverse the amount upon notification along with interest. Penalties were not imposed due to the interpretational nature of the issue and the partial set aside of the demand.

5. Ultimately, the appeals were disposed of based on the above considerations, highlighting the importance of the interpretation of the relevant legal provisions and the impact of subsequent amendments on credit entitlement and quantification.