2012 (11) TMI 883 - AT - Service Tax

CENVAT credit of Service Tax paid on GTA services - Input servcies - place of removal of goods - Held that - the purchase orders are on FOR basis and it is the appellant who has to bear the freight and insurance by arranging transportation of the goods. It is also not the Revenue s case that anything more than what has been reflected in the invoices as the cost of goods stands recovered by the appellant from their buyers in the name of freight and insurance. If that be so all the expenses incurred up to the buyers premises which are also reflected in the invoices and adopted by the appellant as an assessable value. It is also not the revenue s case that freight and insurance is being charged/collected by the appellant separately. - appellants were the owners of the goods upto the place of delivery that is the buyers premises and as such the GTA services so availed by them are to be treated as inputs services. - Cenvat Credit allowed.

Summary

Issues:
1. Availment of credit of Service Tax paid on GTA services under the FOR contract.

Analysis:
The judgment revolves around the issue of the availment of credit of Service Tax paid on Goods Transport Agency (GTA) services under a FOR contract. The appellant, engaged in manufacturing nuts, bolts, and wire equipment, entered into FOR contracts with customers, making transportation their responsibility. The dispute arose when the Revenue contended that due to an amendment in the definition of input services, the appellant was not entitled to avail the credit post-1.4.08. This led to proceedings resulting in the denial of Cenvat credit and imposition of penalties.

The appellant argued that their sales were on FOR basis, extending the place of removal to the buyer's premises. They presented evidence, including purchase orders, invoices, and a Chartered Accountant's certificate, supporting their claim. They relied on a Punjab and Haryana High Court decision and a Board's circular, emphasizing fulfilling conditions like ownership of goods, risk-bearing during transit, and freight charges being part of the price. The appellant contended that they met all conditions and were entitled to Cenvat credit of Service Tax on GTA services.

The judgment analyzed the input service definition, insurance cover for transportation, and the integral nature of freight charges in the sale price. The Tribunal found that the appellant retained ownership of goods until delivery at the buyer's premises, bore transit risks, and included freight charges in the sale price. Consequently, the first question favored the appellant, leading to lawful credit availment without contravention. The appellate authority acknowledged the FOR basis of purchase orders but questioned the Chartered Accountant's certificate's lack of detailed expense breakdown.

Ultimately, the judgment favored the appellant, setting aside the impugned order and allowing the appeal with consequential relief. It upheld the appellant's entitlement to credit for GTA services under the FOR contract, emphasizing compliance with ownership, risk-bearing, and pricing conditions as per legal precedents and circulars.