2015 (3) TMI 702 - HC - Service Tax

Availment of CENVAT Credit - Utilization of CENVAT Credit instead of cash for payment of ST on GTA services - Held that - sub-Rule 4 of Rule 3 of Cenvat Credit Rules 2004 relate to utilization of Cenvat credit. That sub-Rule makes it clear that credit can be utilized for payment of excise duty as well as service tax on any output service. Thus, payment of service tax is a specifically authorized item in regard to service tax credit. In the present case, the appellant is treated as a service provider when he it service tax on transport service Corollary of it is that the transport involved is an output service. Therefore, the finding of the Commissioner that since the appellants are manufacturers of excisable goods they cannot be treated as provider of output service is not sustainable. This Tribunal s decision in the case of Nahar Industrial Enterprises Ltd. also supports the appellant s case. - Following decision of Commissioner of Service Tax Versus Hero Honda Motors Ltd. 2012 (12) TMI 734 - DELHI HIGH COURT - Decided against Revenue.

Summary

Issues involved:
1. Interpretation of Rule 2(p) of the Cenvat Credit Rules, 2004.
2. Utilization of service tax credit for payment of service tax on transportation of goods.
3. Applicability of service tax credit for manufacturers of excisable goods.
4. Consistency in judicial decisions across different High Courts.

Analysis:
1. The judgment pertains to an appeal filed by the Excises Commissioner under Section 35-G of the Central Excise Act, 1944 against the order passed by the Customs, Excise & Service Tax Appellate Tribunal. The main question of law raised was whether a manufacturer of excisable goods, responsible for paying service tax on transportation of goods by road, can be considered an output service provider under Rule 2(p) of the Cenvat Credit Rules, 2004.

2. The Tribunal allowed the appeal filed by the assessee, holding that the manufacturer could utilize service tax credit for payment of service tax on transport services. The Tribunal referred to Rule 3 of the Cenvat Credit Rules, which allows the utilization of credit for payment of excise duty and service tax on any output service. The Tribunal concluded that since the manufacturer pays service tax on transport services, they are considered a service provider, making the transport an output service.

3. The High Court noted that similar issues had been decided by the Delhi High Court and Punjab and Haryana High Court in favor of the assessee. The decision of the Punjab and Haryana High Court was under challenge before the Supreme Court. The High Court observed that the view taken by the Tribunal was based on the decisions of these High Courts, and since no apparent error was pointed out by the revenue, the appeal was dismissed, upholding the impugned order of the Tribunal.

4. The High Court emphasized the consistency in judicial decisions across different High Courts and decided to follow the views taken by the Delhi and Punjab and Haryana High Courts. The judgment concluded by directing the preservation of the original order in Tax Case No. 44/2007 and its copy in another connected Tax Case No. 46/2007, without imposing any costs.

This detailed analysis of the judgment highlights the interpretation of relevant legal provisions, the application of service tax credit, the status of manufacturers in relation to service tax, and the significance of consistency in judicial decisions across different High Courts.