2013 (9) TMI 738 - AT - Service Tax

Demand - Goods Transport Agency Serives - CENVAT credit - Held that - Service tax on GTA service can be discharged through Cenvat Credit account. Therefore, the initial payment made by the appellant was valid in law. Therefore, the question of paying the same through cash again was not required under law and hence, the question of demand of any interest for late payment of service tax does not arise at all and the demand is unsustainable in law - appellant is at liberty to take re-credit of the service tax paid through Cenvat Credit account. The appellant is also entitled for the refund of interest paid under protest - Following decision of Commissioner of Central Excise, Chandigarh Versus Nahar Industrial Enterprises Ltd. 2007 (3) TMI 201 - CESTAT NEW DELHI - Decided in favour of assessee.

Summary

Issues:
Validity of payment of service tax through Cenvat Credit account for Goods Transport Agency Services, rejection of claim for re-credit, demand for interest on delayed payment of service tax.

Analysis:

Issue 1: Validity of payment through Cenvat Credit account
The appellant, M/s Maharashtra Seamless Ltd., received Goods Transport Agency Services and discharged the service tax liability through Cenvat Credit account. The department contended that the appellant could not pay the service tax through Cenvat Credit for GTA services and directed payment through cash. The appellant paid the amount through cash but did not pay the interest. A show-cause notice was issued, and the jurisdictional Assistant Commissioner directed the appellant to pay interest on delayed payment in cash. The appellant filed an appeal challenging this decision.

Issue 2: Rejection of claim for re-credit
The appellant filed a claim for re-credit of the amount debited through Cenvat Credit towards the payment of service tax on GTA services. The claim was rejected, and the Assistant Commissioner directed the appellant to pay interest on delayed payment in cash. The appellant contested this rejection in the appeal before the lower appellate authority.

Issue 3: Demand for interest on delayed payment
The appellant argued that previous decisions by the Tribunal and High Courts have upheld the payment of service tax on GTA services through Cenvat Credit account. Citing various case laws, the appellant contended that the payment made through Cenvat Credit account was valid, and therefore, the demand for payment through cash and interest on delayed payment were not warranted. The Commissioner for the Revenue conceded to this argument.

In the judgment, the Tribunal considered the case laws cited by the appellant and concluded that service tax on GTA services can indeed be discharged through the Cenvat Credit account. The initial payment made by the appellant through Cenvat Credit was deemed valid in law. Therefore, the Tribunal held that the demand for payment through cash again and the interest on delayed payment were not required under the law. As a result, the Tribunal set aside the impugned order, allowed the appeal, and granted the appellant the right to take re-credit of the service tax paid through Cenvat Credit account. Additionally, the appellant was entitled to a refund of the interest paid under protest, in accordance with the law.