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2014 (12) TMI 876 - HC - Service TaxCENVAT Credit - Goods Transport Agency Service - Held that - Rule 3 of the Cenvat Credit Rules, 2004 pertains to Cenvat credit. Sub-rule (1) thereof allows the manufacturer or purchaser of final products or provider of output service to take credit of Cenvat of various duties specified therein. Sub-rule (4) of Rule 3 of the said Rules provides that the Cenvat credit may be utilized for payment of various duties specified in clauses (a) to (e) thereof; clause (e) pertains to service tax on any output service . A combined reading of these statutory provisions would, therefore, establish that though the assessee was liable to pay service tax on G.T.A. Service, it could have utilized Cenvat credit for the purpose of paying such duty. In view of the decisions of Punjab and Haryana High Court and Delhi High Court noted 2010 (5) TMI 608 - PUNJAB AND HARYANA HIGH COURT , we do not find any error in the view of the Tribunal - Decided against Revenue.
Issues:
1. Whether CESTAT committed substantial errors of law in allowing the utilization of Cenvat credit for payment of service tax on Goods Transport Agency Service? 2. Whether the decision of Punjab and Haryana High Court regarding payment of service tax from Cenvat credit is legally valid and applicable? 3. Whether the Notification No. 36/2004 dated 31st December 2004 shifts the liability of service tax payment from the service provider to the service recipient for specified categories of goods transport services? 4. Whether Rule 3 of the Cenvat Credit Rules, 2004 permits the utilization of Cenvat credit for payment of service tax on any output service? Analysis: 1. The case involved a dispute where the assessee utilized Cenvat credit arising from manufacturing activities to pay service tax for Goods Transport Agency (G.T.A.) Service. The Revenue contended that Cenvat credit should not have been used for this purpose. However, the Tribunal upheld the assessee's stand, citing decisions of various High Courts, including Punjab and Haryana High Court, which held that there is no legal restriction on utilizing Cenvat credit for service tax payment on G.T.A. services. The Tribunal's decision was based on the interpretation of Rule 3(4)(e) of the Cenvat Credit Rules, 2004, allowing the utilization of Cenvat credit for payment of service tax on any output service. 2. The decision of Punjab and Haryana High Court in the case of M/s. Nahar Industrial Enterprises Ltd., which allowed the payment of service tax on G.T.A. service from Cenvat credit, was considered valid and applicable. The High Court relied on Rule 3(4)(e) of the Cenvat Credit Rules, 2004, which permits the utilization of Cenvat credit for service tax payment on any output service, including G.T.A. service. This decision was further supported by the Delhi High Court, which emphasized the provisions of Section 68(2) of the Finance Act, 1994, to affirm the legality of utilizing Cenvat credit for service tax payment. 3. The Notification No. 36/2004 dated 31st December 2004, issued under Section 68(2) of the Finance Act, 1994, specified categories of goods transport services for which the liability of service tax payment was shifted from the service provider to the service recipient. This notification, in conjunction with the statutory provisions, supported the assessee's right to use Cenvat credit for paying service tax on G.T.A. services. 4. Rule 3 of the Cenvat Credit Rules, 2004 allows the utilization of Cenvat credit for payment of service tax on any output service, as specified in clause (e). The combined reading of this rule, along with the decisions of Punjab and Haryana High Court and Delhi High Court, affirmed the legality of utilizing Cenvat credit for service tax payment on G.T.A. services. Consequently, the Tribunal's decision was upheld, and the Tax Appeal was dismissed.
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