2014 (9) TMI 76 - AT - Service Tax

Goods transport agency service - payment of service tax using cenvat credit - Held that - Panchamahal Steel Ltd. vs. CCE & ST, Vadodara reported in, whereby the Tribunal, after relying upon the decision of the Hon ble Punjab & Haryana High Court in the case of CCE vs. Nahar Industrial Enterprises Ltd. reported in 2010 (5) TMI 608 - PUNJAB AND HARYANA HIGH COURT , decision of the Hon ble Himachal Pradesh High Court in the case of CCE vs. Auro Spinning Mills reported in 2011 (7) TMI 849 - Himachal Pradesh High Court and the decision of Hon ble Delhi High Court in the case of CST vs. Hero Honda Motors Ltd. reported in 2012 (12) TMI 734 - DELHI HIGH COURT , held in favour of the assessee. The period in dispute is prior to the amendment on 1.3.2008 to the provisions of Rule 2(p) of the Cenvat Credit Rules. - Decided in favour of assessee.

Summary

Issues involved:
- Interpretation of legal fiction in utilizing cenvat credit for payment of service tax by a deemed service provider under Section 68(2) of the Finance Act.

Analysis:
The judgment deals with an appeal where both the Revenue and the assessee challenged the same impugned order concerning the period from January 2005 to August 2007. The central issue revolved around whether an assessee, not the actual service provider but discharging the service tax liability as a deemed service provider under Section 68(2) of the Finance Act, could utilize cenvat credit for paying goods transport agency service tax. This issue had been settled by the Larger Bench of the Tribunal in the case of Panchamahal Steel Ltd. vs. CCE & ST, Vadodara. The Tribunal, drawing on precedents from various High Courts, including Punjab & Haryana, Himachal Pradesh, and Delhi, ruled in favor of the assessee. Notably, the decision was based on the legal position before the amendment to Rule 2(p) of the Cenvat Credit Rules on 1.3.2008. Consequently, the appeal by the assessee, Lombardini India Pvt. Ltd., was allowed, while the appeal by the Revenue was dismissed. The cross objections were also disposed of as part of the judgment.

This judgment underscores the significance of legal interpretations surrounding deemed service providers' entitlement to utilize cenvat credit for service tax payments. The reliance on the Larger Bench's ruling and the alignment with decisions from various High Courts demonstrate the thorough legal analysis undertaken by the Tribunal. The temporal aspect, concerning the period before the specific amendment to the Cenvat Credit Rules, played a crucial role in determining the outcome of the appeal. The clarity provided by the Tribunal in settling this issue contributes to the jurisprudence on service tax liabilities and cenvat credit utilization, providing guidance for future cases with similar factual and legal complexities.