2017 (4) TMI 388 - AT - Service Tax

Utilisation of CENVAT credit account - Goods Transport Agency service - reverse charge mechanism - the case of Revenue is that as credit on account on GTA Service was not in their cenvat credit account, therefore, cenvat credit cannot be utilised for payment on GTA Service in terms of N/N. 10/2008-CE (NT) dated 01.03.2008 - whether in terms of N/N. 10/2008 dated 01.03.2008, the appellant can utilise cenvat credit account for payment on GTA Service for procurement of inputs or not? - Held that - The said issue came up before this Tribunal in the case of UNI Deritend Ltd. 2011 (10) TMI 347 - CESTAT, MUMBAI wherein it was held that In view of Shri Tubes & Steels 2010 (9) TMI 815 - CESTAT, BANGALORE the appellants are entitled to pay service tax through Cenvat Credit account for the period prior to 19.4.2006 - the appellant cannot utilise cenvat credit account for payment on GTA Service for procurement of inputs - demand upheld. Imposition of penalty u/s 76 of FA, 1994 - Held that - the N/N. 10/08 dated 01.03.2008 came into effect from 01.04.2008, in that circumstances, benefit of Section 80 of the FA, 1994 is available to the appellant as whatever the service tax has been paid, therefore, the appellant is entitled for cenvat credit - penalty u/s 76 of the FA, 1994 is not imposable on the appellant. Appeal disposed off - decided partly in favor of appellants.

Summary

Issues:
1. Utilisation of cenvat credit account for Goods Transport Agency service under reverse charge mechanism.

Analysis:
The appellant, engaged in manufacturing cycles, appealed against the denial of utilizing cenvat credit account for Goods Transport Agency (GTA) services under reverse charge mechanism. The Revenue objected that as credit for GTA service was not in the cenvat credit account, it cannot be utilized for payment, as per Notification No.10/2008-CE. The Tribunal analyzed whether the appellant can use cenvat credit for GTA service procurement. Previous cases like UNI Deritend Ltd. and Maharaja Shree Ummaid Mills were considered. UNI Deritend Ltd. held that post 19-4-2006, the appellant cannot use cenvat credit for GTA service tax payment. However, penalties post 19-4-2006 were set aside. In Maharaja Shree Ummaid Mills, the appellant was directed to deposit 50% of the duty within 8 weeks. Another case, M/s Royal Enfield, allowed cenvat credit for GTA service tax payment pre-1-3-2008. Various Tribunal decisions favored utilizing cenvat credit for GTA services. The appellant was not entitled to cenvat credit as in the case of ITC Ltd. where no manufacturing activity was undertaken. The Tribunal set aside the impugned orders and allowed both appeals. The Division Bench and Single Member Tribunal decisions also rejected Revenue appeals on similar issues.

The Tribunal held that the appellant cannot utilize cenvat credit for GTA service payment for input procurement, upholding the service tax demand with interest. The penalty under Section 76 of the Finance Act, 1994 was imposed on the appellant, but as the Notification No. 10/08 dated 01.03.2008 came into effect from 01.04.2008, the appellant was entitled to cenvat credit, leading to setting aside of the penalty. Consequently, the appeal was disposed of in favor of the appellant.