2013 (2) TMI 538 - AT - Service Tax

Utilizing Cenvat credit for discharge of service tax liability on GTA services - Held that - 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, hence, the assessee were well within their right to utilize the Cenvat credit for the purpose of payment of service tax and has not to be necessarily in cash - in favour of assessee.

Summary

Issues:
1. Utilization of Cenvat credit for service tax liability on GTA services.
2. Applicability of CBEC Circular No. 97/8/2007-ST.
3. Penalty imposition under Sections 76, 77, and 78 of the Finance Act, 1994.

Detailed Analysis:
1. The primary issue in this case was whether the appellant could use the Cenvat credit to pay the service tax liability on Goods Transport Agency (GTA) services during the period from April 2006 to March 2007. The appellant had utilized the credit for payment, but the authorities contended that the credit could only be used for output services. The Tribunal examined the relevant legal provisions and previous judgments to determine the eligibility of the appellant to use the credit. The definition of output service was crucial, and the Tribunal found that the appellant was entitled to utilize the Cenvat credit for discharging the service tax liability on GTA services during the specified period.

2. The Tribunal also considered the applicability of CBEC Circular No. 97/8/2007-ST, which clarified the payment of service tax on goods transport by road service. While the circular highlighted the requirement for cash payment of service tax, the Tribunal's analysis focused on the specific provisions of the Cenvat Credit Rules, 2004, and relevant legal precedents to determine the correct method of discharging the service tax liability. The Tribunal's decision was based on a comprehensive evaluation of the legal framework and judicial interpretations, ultimately allowing the appellant to use the Cenvat credit for the specified purpose.

3. Additionally, the issue of penalty imposition under Sections 76, 77, and 78 of the Finance Act, 1994, was addressed in the judgment. The lower authorities had imposed penalties on the appellant along with the service tax demand. The appellant challenged these penalties before the first appellate authority, citing grounds of limitation and merits. However, the first appellate authority upheld the penalties imposed. The Tribunal's decision on the primary issue of Cenvat credit utilization also impacted the penalty aspect, as the appellant's eligibility to use the credit influenced the overall tax liability and consequent penalties. Ultimately, the Tribunal allowed the appeal, indicating a favorable outcome for the appellant on both the primary issue and the associated penalties.

In conclusion, the Appellate Tribunal CESTAT Ahmedabad ruled in favor of the appellant, allowing the utilization of Cenvat credit for the service tax liability on GTA services during the specified period. The judgment extensively analyzed legal provisions, precedents, and relevant circulars to arrive at a well-founded decision. The Tribunal's detailed examination of the issues involved, including penalty imposition, showcased a thorough and comprehensive approach to resolving the dispute in this case.