2015 (2) TMI 930 - AT - Service Tax

Goods Transport Agency - Authorised Service Station - Revenue have disallowed the input service credit on GTA service, holding that the input service is in respect of sales of motor cycles, which is a trading activity and not related to the servicing activity of the appellant - Held that - The facts are squarely covered by earlier ruling of this Tribunal in 2014 (5) TMI 614 - CESTAT MUMBAI & in the case of CCE Vs. Shariff Motors (2009 (3) TMI 155 - CESTAT, BANGLORE). I have taken up the matter for final disposal with consent, and accordingly, following the ruling of this Tribunal I allow the appeal in favour of the appellant and Revenue is directed to refund the amount of tax within six weeks from receipt of copy of this order, along with interest as per Rules. - Decided in favour of assessee.

Summary

Issues:
1. Disallowance of input service credit on Goods Transport Agency (GTA) service for sales of motor cycles.
2. Applicability of input service tax credit in respect of GTA services for authorized service station services.
3. Interpretation of the agreement between the appellant and the manufacturer for sales and service activities.

Analysis:
1. The appellant, an authorized dealer for sales and services of motor cycles, pays Service Tax on GTA service for transporting motor cycles from the manufacturer to its premises. The Revenue disallowed the input service credit on GTA service, claiming it was related to trading activity, not servicing. The Commissioner (Appeals) upheld this decision. The appellant argued that the agreement with the manufacturer covers sales and service, making sales an integrated activity, justifying input service tax credit for GTA services. Citing precedents like CCE Vs. Shariff Motors and Badrika Motors (P) Ltd. Vs. CCE, the appellant contended that input service credit for GTA services is admissible under the Act.

2. The appellant's counsel emphasized that the GTA service was received at the shop premises and utilized for payment of Service Tax under authorized service station services. Relying on the tribunal's decision in CCE Vs. Shariff Motors, it was argued that the Revenue's narrow view was unjustified. The learned A.R., however, supported the lower court's decision, stating that GTA service was primarily used for sales, justifying the disallowance of input service credit. The Tribunal found the facts aligned with its earlier ruling and a High Court judgment, ultimately allowing the appeal in favor of the appellant. The Revenue was directed to refund the tax amount along with interest within six weeks.

3. The Tribunal's decision was based on the interpretation of the agreement between the appellant and the manufacturer, considering the integrated nature of sales and service activities. Citing previous rulings and consent for final disposal, the Tribunal ruled in favor of the appellant, emphasizing the admissibility of input service credit for GTA services. The judgment highlighted the importance of considering the broader context of the appellant's business operations in determining the eligibility for input tax credit, ultimately leading to a favorable outcome for the appellant.