2008 (5) TMI 45 - AT - Service Tax

Appellant discharged Service Tax liability on the services received from goods transport agency for the period January 2005 to February 2006 through Cenvat credit account instead of paying it by TR 6 challan as per Explanation to Rule 2(p) of CCR, impugned services are deemed to be output services hence as per Rule 3(4), payment of tax by way of credit is correct demand not sustainable impugned order is set aside - appeal is allowed

Summary

Issues:
1. Whether the appellant can use Cenvat credit for paying Service Tax on goods transport agency services.
2. Interpretation of Rule 3(4) of the Cenvat Credit Rules, 2004.
3. Applicability of definitions under Rule 2(p) and Rule 2(r) of Cenvat Credit Rules, 2004.

Issue 1:
The appeal challenges the Order-in-Appeal confirming the demand of Service Tax and penalties on the appellant for using Cenvat credit instead of TR 6 challan for Service Tax payment on services from a goods transport agency. The Commissioner upheld the demand, citing non-compliance with Service Tax rules. The appellant argued that previous Tribunal decisions favored their position. The Tribunal analyzed whether the appellant could use Cenvat credit for Service Tax payment on goods transport services. The revenue contended that TR 6 challan should be used. The Tribunal examined Rule 2(p) and Rule 2(r) of Cenvat Credit Rules, 2004, defining output services and providers of taxable services. Rule 3(4) allows Cenvat credit utilization for Service Tax on output services. The Tribunal concluded that the appellant, as the service receiver, could use Cenvat credit for Service Tax payment, supported by previous Tribunal decisions.

Issue 2:
The Tribunal scrutinized Rule 3(4) of the Cenvat Credit Rules, 2004, which permits Cenvat credit utilization for Service Tax on output services. The rule specifies conditions for utilizing Cenvat credit, including for Service Tax payment. The revenue argued against Cenvat credit use, emphasizing the rule's limitations to manufacturers and service providers only. However, the Tribunal interpreted Rule 3(4) broadly, allowing the appellant, as the service receiver, to use Cenvat credit for Service Tax payment on goods transport services, in line with the rule's provisions.

Issue 3:
The Tribunal analyzed Rule 2(p) and Rule 2(r) of Cenvat Credit Rules, 2004, defining output services and providers of taxable services. Rule 2(r) includes persons liable for paying Service Tax as providers of taxable services. The Tribunal reconciled the definitions to determine if the appellant, as the service receiver, could use Cenvat credit for Service Tax payment. The Tribunal's interpretation aligned with the definitions, allowing the appellant to utilize Cenvat credit for Service Tax on goods transport agency services, supported by previous Tribunal decisions.

This detailed analysis of the judgment highlights the interpretation of relevant rules and definitions, providing a comprehensive understanding of the Tribunal's decision regarding the appellant's use of Cenvat credit for Service Tax payment on goods transport services.