2017 (10) TMI 1369 - HC - Service Tax

Utilization of CENVAT Credit - Whether Section 68(2) of the Central Excise Act, 1994 read with Rule 6(2) of Service Tax rules, 1994 & Rule 3(4) of the Cenvat Rules, 2004 permit utilize of Cenvat Credit account for payment of Service Tax on Goods Transport Agency service during the relevant period of February, 2005 to September, 2006? Held that - The SLP is pending against the decision of Punjab & Haryana High Court - the issue is required to be answered in favour of the assessee against the department - appeal dismissed.

Summary

Issues:
Interpretation of Section 68(2) of the Central Excise Act, 1994 in conjunction with relevant rules for utilizing Cenvat Credit for payment of Service Tax on Goods Transport Agency service during a specific period.

Analysis:
The High Court considered the appeals challenging the Tribunal's decision allowing the assessee's appeal. The Court framed the key question of law regarding the use of Cenvat Credit for paying Service Tax on Goods Transport Agency service during a specified period. The Respondent relied on judgments from various High Courts to support their argument. The Punjab & Haryana High Court's decision emphasized the permissibility of utilizing Cenvat credit for service tax payment on output services, including GTA services, as per the Cenvat Credit Rules. Similarly, the Madras High Court highlighted the deeming provisions under the Finance Act and Cenvat Credit Rules, allowing recipients of taxable services to benefit from Cenvat credit for service tax liability. The Gujarat High Court's decision supported parity in allowing excise duty payment from Cenvat credit accounts, emphasizing the benefit granted to similarly situated entities. The Delhi High Court also upheld the utilization of Cenvat credit for service tax payment, aligning with the Punjab & Haryana High Court's interpretation. Furthermore, the Himachal Pradesh High Court's decision reinforced the permissibility of utilizing Cenvat credit for service tax on GTA services, citing relevant rules and CBEC instructions. The Court noted the pendency of an SLP against the Punjab & Haryana High Court's decision, ultimately ruling in favor of the assessee against the department, leading to the dismissal of the appeals.