2012 (10) TMI 558 - AT - Service Tax

Payment of service tax by using cenvat credit - Goods Transport Agencies (GTA) - period of dispute from April 2007 to February 2008 - Held that - Explanation to Rule 2(p) output service means any taxable service provided by the provider of taxable service, to a customer, client, subscriber, policy holder or any other person, as the case may be, and the expressions provider and provided shall be construed accordingly as omitted with effect from 19.4.2006, i.e., prior to the period of dispute. The definition of output service itself was amended with effect from 1.3.2008, i.e., after the period of dispute. Thus when the respondent was paying service tax on GTA service, they were doing so on an output service and, therefore, they were entitled to utilise CENVAT credit for payment of such tax. The definition of person liable for paying service tax and the definition of provider of taxable service given under Rule 2 (q) & (r) respectively seem to be supportive of this argument. As decided in COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH Versus M/s NAHAR INDUSTRIAL ENTERPRISES LTD and Others 2010 (5) TMI 608 - PUNJAB AND HARYANA HIGH COURT there is no legal bar to the utilisation of Cenvat credit for the purpose of payment of service tax on the GTA services - the service tax was paid out of the Cenvat credit on GTA services and, hence, the assessee were well within their right to utilize the Cenvat credit for the purpose of payment of service tax - in favour of assessee.

Summary

Issues:
Dispute over utilization of CENVAT credit for payment of service tax on Goods Transport Agency (GTA) services.

Analysis:

1. Background and Dispute:
The respondent, engaged in manufacturing excisable goods, utilized GTA services for transportation during April 2007 to February 2008. A dispute arose regarding the utilization of CENVAT credit for paying service tax on GTA services. The original authority confirmed a demand against the respondent, which was contested. The Commissioner (Appeals) later provided relief to the assessee, considering them as a provider of GTA services.

2. Arguments by Department:
The learned Superintendent (AR) argued that GTA service availed by a manufacturer cannot be considered an output service, hence no CENVAT credit could be used for paying service tax on GTA services. The department relied on various decisions to support their stance.

3. Arguments by Respondent:
The respondent's counsel argued that the omission of the Explanation to Rule 2(p) of the CENVAT Credit Rules, 2004, was not relevant to the respondent, a manufacturer of excisable goods. They contended that the respondent should be deemed to have provided GTA services and thus entitled to utilize CENVAT credit for service tax payment. Several decisions were cited to support this argument.

4. Judgment and Analysis:
The Tribunal analyzed the definitions of output service and provider of taxable service under the CENVAT Credit Rules, 2004. The Tribunal highlighted that the definition of output service was amended post the dispute period, specifically excluding GTA services. The Tribunal agreed with the respondent's argument that during the dispute period, GTA services were considered output services, allowing the utilization of CENVAT credit for service tax payment. The Tribunal referenced relevant case laws, including a High Court decision supporting the respondent's position.

5. Conclusion:
The Tribunal dismissed the department's appeal, upholding the lower appellate authority's decision in favor of the respondent. The judgment emphasized that the respondent, as a manufacturer of excisable goods, was entitled to utilize CENVAT credit for payment of service tax on GTA services during the disputed period.

This detailed analysis of the judgment provides a comprehensive understanding of the legal issues involved and the rationale behind the Tribunal's decision.