2014 (4) TMI 490 - AT - Service Tax

GTA service recipient of services - payment of service tax by using cenvat credit Held that - Following decision of CCE vs. Nahar Industrial Enterprises Limited 2010 (5) TMI 608 - PUNJAB AND HARYANA HIGH COURT - respondents were well within their right to utilize the Cenvat credit for the purpose of payment of service tax - Decided in favour of assessee.

Summary

Issues:
Whether a person who is not the actual service provider but pays service tax under Section 68(2) of the Finance Act, 1994 as a deemed service provider can utilize CENVAT credit for Goods Transport Agency service tax.

Analysis:
The appellants, engaged in manufacturing excisable goods, are also liable for service tax under the Goods Transport Agency service. They use CENVAT credit for manufacturing activities to pay service tax on GTA service. The Revenue argues that CENVAT credit cannot be used for services rendered and should be paid in cash.

The dispute pertains to the period before 01.3.2008 when there was no restriction on such utilization. High Court decisions like CCE vs. Nahar Industrial Enterprises Limited and others have clarified that there is no legal bar to using CENVAT credit for paying service tax on GTA services. The Punjab & Haryana High Court held that Rule 3(4)(e) of the CENVAT Credit Rules allows utilizing credit for any output service, including service tax on GTA services.

The High Courts have consistently ruled in favor of allowing the use of CENVAT credit for payment of service tax on GTA services. Therefore, the question posed is answered in favor of the assessee. The appeal is to be listed before the Regular Bench for further proceedings.