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2014 (1) TMI 316 - AT - Service TaxDisallowance of CENVAT Credit - Goods Transport Agency - Reverse charge - Authorised Service Station - Business Auxiliary Service - Nexus between GTA and BAS - Held that - appellant does service two wheelers manufactured by the Company and that the tax on GTA service was remitted for the transport of two wheelers and spares from the manufacturer to the appellant s show room - there is a sufficient and a proximate nexus for availment of cenvat credit earned on remittances of tax on GTA services, for utilization in its output service as authorized service station and provider of BAS - Following decision of Sri Venkanna Motors Pvt. Ltd. vs. Asstt.Commr. of C. Ex. & ST., Hyderabad - 2009 (3) TMI 877 - CESTAT BANGALORE and C.C.E., Tirupathi vs. Shariff Motors - 2009 (3) TMI 155 - CESTAT, BANGLORE - Decided in favour of assessee.
Issues: Disallowance of cenvat credit under Section 78 of the Act based on show cause notices for the period 2006-07 to August 2009.
The judgment revolves around the disallowance of cenvat credit by the Assistant Commissioner, Customs & Central Excise, Satna, amounting to Rs. 2,77,188/- and Rs. 54,062/-, with a direction for recovery, interest, and penalty under Section 78 of the Act. The disallowance was a result of two show cause notices issued in 2010, questioning the cenvat credit availed by the appellant, a dealer engaged in marketing, distribution, and service of two-wheelers manufactured by Hero Honda Motors Limited. The appellant remitted service tax under the Goods Transport Agency service on transport charges paid to goods transport agencies for transporting two-wheelers and spare parts. The dispute arose regarding the nexus between the remittances made for goods transport agency services and the services provided by the appellant, such as "Authorised Service Station" and "Business Auxiliary Service." The primary and appellate authorities disallowed the cenvat credit, leading to the appeal before the Tribunal. Moving on to the legal analysis, Rule 2(1) of the Cenvat Credit Rules, 2004 defines "input service" as any service used by a provider of taxable service for providing an output service. The appellant, under the dealership agreement with Hero Honda Motors Limited, was obligated not only to sell products and spares but also to service the two-wheelers. The Tribunal emphasized that a precise correlation between input and output services is not required. It was acknowledged that the appellant serviced two-wheelers manufactured by the company and remitted tax on GTA services for transporting two-wheelers and spares to the showroom. The Tribunal found this nexus between the input service (transportation) and output service (servicing two-wheelers) sufficient for availing cenvat credit. The Tribunal relied on precedents to support its decision. It cited cases such as Sri Venkanna Motors Pvt. Ltd. vs. Asstt.Commr. of C. Ex. & ST., Hyderabad and C.C.E., Tirupathi vs. Shariff Motors to reinforce the principle that a proximate nexus between input and output services justifies the availment of cenvat credit. Based on this analysis, the Tribunal concluded that the adjudication order disallowing the cenvat credit could not be sustained. The order was quashed, and the appeal was allowed without costs.
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