2013 (12) TMI 1172 - AT - Service Tax

Demand of service tax - GTA Service - Availment of CENVAT Credit - Whether during the period from 19-4-2006 onwards, the GTA services received by the appellant and in respect of which they had paid the service tax as service recipient would be treated as their output service - Held that - It is by virtue of this explanation that prior to 19-4-2006, the GTA services received by a person in respect of which he was liable to pay service tax as service recipient could be treated as his output service and on this basis, he could pay the service tax through Cenvat credit. During period w.e.f. 19-4-2006, in absence of the deeming provisions, the service received by a manufacturer cannot be treated as his output service, as in terms of Rule 2(p) of the Cenvat Credit Rules, 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 in case, the GTA service received by an assessee, there is no customer or client and hence, the GTA service received could not be treated as the output service - appellant could not discharge service tax liability in respect of the GTA service received by them through Cenvat credit and the service tax liability was to be discharged through PLA only - Decided against assessee.

Summary

Issues:
Interpretation of output service for service tax liability on GTA services received by the appellant post-19-4-2006.

Analysis:
The judgment revolves around the interpretation of the term "output service" concerning the service tax liability on GTA services received by the appellant after 19-4-2006. Prior to this date, an explanation in Rule 2(p) of the Cenvat Credit Rules, 2004 clarified that if a person liable to pay service tax does not provide any taxable service or manufacture final products, the service for which he is liable to pay tax shall be deemed as the output service. This allowed the GTA services received by a person to be treated as their output service, enabling payment through Cenvat credit. However, post-19-4-2006, with the absence of such deeming provisions, the service received by a manufacturer cannot be considered as their output service. As per Rule 2(p), 'output service' refers to any taxable service provided by the provider to a customer, client, subscriber, policy-holder, or any other person. In the case of GTA services received by an assessee, there is no customer or client involved, thereby disqualifying it as an output service.

The tribunal concluded that during the disputed period, the appellant was unable to discharge their service tax liability on the GTA services received through Cenvat credit. Consequently, the service tax liability had to be settled through PLA (Personal Ledger Account) only. Given this scenario, the tribunal found no fault in the impugned order and dismissed the appeal. The judgment highlights the critical distinction in the treatment of output services pre and post-19-4-2006 concerning GTA services received by the appellant, emphasizing the necessity for compliance with the updated regulations for service tax liabilities.