2013 (10) TMI 685 - AT - Service Tax

CENVAT Credit - Input service - Held that - Applicant had availed the CENVAT Credit on various inputs and input services and utilized the same in discharging their service tax liability on GTA service for the period from 2005-06 to 2007-08. It is not in dispute that the definition of Output Service has been amended with effect from 01.03.2008, thereby utilization of the said Credit towards payment of service tax liability on GTA service becomes no more permissible - CENVAT Credit on input and input services could be utilized for payment of service tax liability on GTA service and the said ratio is applicable before amendment to the said definition of Output Service . A major portion of the demand is covered by the period prior to March, 2008 - Applicant could able to make out a prima facie case for total waiver of the dues adjudged. - stay granted.

Summary

Issues: Application for waiver of pre-deposit of CENVAT Credit, penalty under Section 78 of the Finance Act, 1994, and penalty under Section 77 of the said Act.

Analysis:
1. The Applicant sought waiver of pre-deposit of CENVAT Credit amounting to Rs.52,56,935, along with penalties imposed under Section 78 and Section 77 of the Finance Act, 1994. The demand primarily related to service tax on GTA service utilized for CENVAT Credit on input and input services during 2005-06 to 2007-08. A portion of the demand, around Rs.2.66 lakh, pertained to a period after 01.03.2008 when Transport of Goods Service was excluded from the definition of 'output service.' The Applicant contended that prior to this amendment, they were eligible to use CENVAT Credit for GTA service tax liability, citing a judgment of Punjab and Haryana High Court. An inadvertent utilization of Credit post-amendment was rectified and reflected in their returns. The Revenue did not contest the legal position presented by the Applicant.

2. The Tribunal examined the records and acknowledged that the Applicant had indeed utilized CENVAT Credit on inputs and input services to pay service tax on GTA service from 2005-06 to 2007-08. Following the amendment in the definition of 'Output Service' effective from 01.03.2008, such Credit utilization for GTA service tax became impermissible. Referring to the precedent set by the Punjab and Haryana High Court in Nahar Industrial Enterprises case, the Tribunal recognized that prior to the amendment, CENVAT Credit could be used for GTA service tax liability. Given that a significant part of the demand pertained to the period before March 2008, the Tribunal found merit in the Applicant's case for a total waiver of the adjudged dues. Consequently, the Tribunal granted a waiver on the pre-deposit of all dues and stayed the recovery during the pendency of the Appeal.

This detailed analysis of the judgment highlights the legal arguments, precedents cited, and the Tribunal's reasoning leading to the decision to grant the waiver of pre-deposit and stay on recovery of dues.