2008 (11) TMI 56 - AT - Service Tax

GTA Service - Department contend that the Service Tax paid by the assessee on GTA Service from the Cenvat credit account (which is maintained for central excise purpose) was not proper - As per the Cenvat Credit Rules and as per the CBEC Excise Manual of supplementary instructions, there is no restriction for utilization of Cenvat credit by the manufacturing unit towards payment of Service Tax as service tax provider - Revenue s appeal dismissed

Summary

Issues:
Recovery of Service Tax paid from Cenvat credit account, eligibility of Cenvat credit for Service Tax, dual role of manufacturer and service provider, interpretation of Cenvat Credit Rules, utilization of credit for payment of Service Tax.

Analysis:
The case involved the recovery of Service Tax paid from the Cenvat credit account by the respondents, who were registered under 'Transport of goods by Road Service.' The Department contended that the Service Tax paid from the Cenvat credit account was improper, leading to the issuance of a show cause notice for recovery along with interest and penalty. The respondents, working as both manufacturers and Service Tax assessees, utilized Cenvat credit for payment of Service Tax. The Department argued that the respondents, though deemed service providers, were not entitled to avail credit meant for actual service providers only. The Commissioner (Appeals) set aside the demands based on a precedent decision by the Tribunal in the respondents' case. The Revenue appealed against this decision.

The Tribunal noted that the only ground raised in the appeal was the challenge to the Tribunal's earlier decision, which the Revenue had taken to the High Court. However, the Tribunal found that this challenge alone did not prove any error on the part of the Commissioner (Appeals) in following the precedent. The Commissioner (Appeals) had ruled in favor of the respondents based on the interpretation that the Cenvat credit could be used by the manufacturing unit for paying Service Tax as a service tax provider. The Tribunal referred to the Cenvat Credit Rules and the CBEC Excise Manual to support this interpretation, highlighting that there were no restrictions on utilizing Cenvat credit in such a manner. Consequently, the Tribunal dismissed the appeal, upholding the impugned order.

In conclusion, the Tribunal affirmed the decision of the Commissioner (Appeals) based on the interpretation of the Cenvat Credit Rules, finding no grounds to interfere with the impugned order. The appeal by the Revenue was rejected, and the original decision in favor of the respondents was upheld.