2008 (9) TMI 244 - AT - Service Tax

GTA service - Denial of benefit of Notification No. 32/2004-S.T which provides abetment of 75% of service tax on the condition that no credit in respect of input or capital goods used for providing such services has been taken - applicant being a manufacturer and also being recipient of input service, is entitled to take credit of the amount of service tax paid - Stay petition is allowed

Summary

Issues:
1. Waiver of pre-deposit of service tax amount.
2. Interpretation of Notification No. 32/2004-S.T regarding abetment of service tax.
3. Requirement of evidence for availing benefit under the notification.
4. Applicability of credit in respect of service tax paid by a manufacturer.

Analysis:
1. The case involved an application for the waiver of pre-deposit of a service tax amount of Rs. 91,983. The demand was contested based on the denial of the benefit of Notification No. 32/2004-S.T, which provides for an abetment of 75% of service tax subject to certain conditions. The revenue argued that the applicant, a recipient of goods transport service, had not provided evidence that the service provider did not avail credit for inputs or capital goods. However, the applicant, relying on a Tribunal decision, contended that as a manufacturer, they were entitled to credit for the service tax paid, making the exercise revenue neutral.

2. The revenue insisted on the condition of the notification requiring the applicant to produce evidence that the service provider did not avail credit for inputs or capital goods. However, the Tribunal considered the applicant's position as a manufacturer and recipient of input service, allowing them to take credit for the service tax paid. In light of this interpretation and the Tribunal's decision, the pre-deposit of the service tax amount was waived, and the stay petition was allowed.

This judgment highlights the importance of understanding the specific conditions and interpretations of notifications related to service tax abetment. It also emphasizes the significance of considering the nature of the taxpayer's business activities, such as manufacturing, when determining their eligibility for tax credits.