2012 (10) TMI 448 - HC - Service Tax

Goods transport agency (GTA) services - payment of service tax by using cenvat credit - Held that - As decided in Nahar Industrial Enterprises Ltd case 2010 (5) TMI 608 - PUNJAB AND HARYANA HIGH COURT a perusal of para 2.4.2 of CBEC s Excise Manual of Supplementary Instructions shows that there is no legal bar to the utilization of Cenvat credit for the purpose of payment of service tax on the GTA services. Also as per Rule 3(4)(e) of the Cenvat Credit Rules, 2004 the Cenvat credit may be utilized for payment of service tax on any output service - in favour of assessee.

Summary

Issues:
Whether a person discharging Service Tax liability as a deemed service provider can utilize CENVAT credit for GTA services.

Analysis:
The appeal was admitted to decide whether a person, not the actual service provider but discharging Service Tax liability under Section 68(2) of the Finance Act, 1994, can use CENVAT credit for GTA services. The key question was whether a manufacturer could benefit from CENVAT credit obtained for manufacturing to pay service tax for GTA services. The Tribunal allowed the assessee to use CENVAT credit for GTA services based on a previous decision in favor of the assessee. The respondent, engaged in manufacturing and liable for service tax on GTA services, used CENVAT credit for service tax payment. The revenue argued that CENVAT credit should not be used for service tax payment, but the Tribunal's decision in Nahar Industrial Enterprises Ltd was cited, where the Punjab and Haryana High Court ruled in favor of the assessee. The High Court held that there was no legal impediment to using CENVAT credit for service tax on GTA services, as supported by CBEC's Excise Manual and Rule 3(4)(e) of the CENVAT Credit Rules, 2004. The Court agreed with the reasoning of the Punjab and Haryana High Court, dismissing the appeal and affirming the right to utilize CENVAT credit for payment of service tax on GTA services.