2017 (9) TMI 890 - AT - Service Tax

Transport of Goods by Road (GTA) Service - abatement - N/N. 32/2004-ST dated 03.12.2004 - whether appellants are eligible to utilize Cenvat credit to pay the service tax under GTA services? - Held that - There is no provision in the Cenvat Credit Rules which prohibit the utilization of Cenvat credit to discharge service tax liability under GTA services. Therefore we find the Commissioner (Appeals) has rightly held this issue in favour of the appellants. The appellant is eligible to pay service tax as a recipient and they are eligible for abatement and the appellants have rightly paid 25% service tax on the freight paid. It is pertinent to state that w.e.f. 1-1-2010 both the conditions (i) and (ii) stipulated under the proviso to the said notification were deleted and the abatement is applicable without any conditions. In view of foregoing discussion, we hold that appellants are eligible for the benefit of exemption Notification No. 32/2004. Therefore, question of demanding differential service tax and imposition of penalty does not arise. Appeal dismissed - decided against Revenue.

Summary

Issues: Determination of eligibility to utilize Cenvat credit for paying service tax under GTA services and denial of abatement under Notification No. 32/2004-ST.

Analysis:

1. Utilization of Cenvat Credit for Service Tax under GTA Services:
The case involved a dispute regarding the eligibility of the appellants to utilize Cenvat credit to pay service tax under Goods Transport Agency (GTA) services. The department contended that Cenvat credit cannot be utilized for this purpose. However, the Commissioner (Appeals) ruled in favor of the appellants, stating that there is no provision prohibiting such utilization under the Cenvat Credit Rules. The Tribunal upheld this decision, emphasizing that the department's appeal lacked merit and dismissing it accordingly.

2. Denial of Abatement under Notification No. 32/2004-ST:
The second issue revolved around the denial of abatement under Notification No. 32/2004-ST to the appellants. The department challenged the abatement claimed by the appellants, arguing that they did not fulfill the conditions of the notification. The Tribunal analyzed the relevant provisions of the notification, which exempted a portion of the service tax under specific conditions. The Tribunal noted that the exemption would not apply if the service provider had availed input or capital goods credit or the benefit under another notification. In this case, the transport operators were individual truck owners who were not registered with the service tax department, leading to a conclusion that the conditions of the notification were not applicable. The Tribunal referred to a previous decision in a similar case and ruled in favor of the appellants, allowing their appeals and rejecting the department's appeals.

In conclusion, the Tribunal dismissed the department's appeals regarding the utilization of Cenvat credit for service tax under GTA services and allowed the appellants' appeals concerning the denial of abatement under Notification No. 32/2004-ST. The decision was based on a thorough analysis of the relevant legal provisions and previous judgments, ensuring a fair and just outcome for the parties involved.