2009 (3) TMI 155 - AT - Service Tax

Cenvat Credit Input Service Goods Transport Service (GTA) - transportation of motor cycles from the factory to the show room held that - The Respondents are paying service tax on GTA services on the service tax paid on transportation of the vehicles to their show room. They are also providers of output service. This output service is servicing of various vehicles. The Revenue has taken a very narrow view that the Respondents might be servicing even vehicles sold by other authorized dealers. In our view, unless the vehicles are received and sold, there would not be any servicing of the same. Moreover the definition of the input service is broad enough to cover the input service availed by the Respondents and also the output service rendered by them. credit allowed.

Summary

Issues:
Whether the Respondents are eligible for availing credit of service tax paid on transportation of motor cycles as input service for payment of service tax on services provided as an authorized service station.

Analysis:
The appeal was filed by the Revenue against the Order-in-Appeal passed by the Commissioner of Central Excise and Customs. The issue revolved around whether the Respondents, who are authorized dealers of motor cycles providing servicing, are entitled to credit of service tax paid on transportation of motor cycles as input service for payment of service tax on services provided as an authorized service station. The Original authority denied the credit stating that input service is applicable only if the input and output services are of the same category. The Commissioner (Appeals) held that the Respondents are eligible for the credit, leading to the Revenue's appeal. The Revenue contended that the inward transportation of new vehicles is not related to the output service of servicing old/used vehicles at the service station. They argued that the input service of transportation of new vehicles ends with the sale and does not relate to the servicing activity.

The Respondents argued that they pay service tax on GTA services for transportation to their show room and provide output service by servicing vehicles. They claimed that unless vehicles are received and sold, there would be no servicing. The Tribunal carefully examined the case records and found that the Respondents pay service tax on transportation services and provide output service by servicing vehicles. The definition of input service was considered broad enough to cover the input service availed by the Respondents and the output service rendered by them. The Tribunal rejected the Revenue's appeal, upholding the Commissioner (Appeals) decision that the Respondents are rightfully entitled to the credit.

In conclusion, the Tribunal ruled in favor of the Respondents, stating that they are eligible for availing credit of service tax paid on transportation of motor cycles as input service for payment of service tax on services provided as an authorized service station. The Tribunal found that the input service of transportation of vehicles to the show room is related to the output service of servicing vehicles, and therefore, the Respondents are entitled to the credit as per the Cenvat Credit Rules, 2004.