2017 (12) TMI 232 - AT - Central Excise

CENVAT credit - GTA Services - Revenue disputed the credit availablility to the appellant on the ground that the said services are not to be taxed under GTA services, rather the tax liability will arise only under the category of mining services introduced w.e.f. 01/06/2007 - classification of services - Held that - the admitted facts are that the appellant did avail services for transport of goods. They did pay service tax on such services under GTA services. On these admitted fact, a denial of credit on the ground that the tax liability will arise on some other heading is not a tenable proposition. What is paid as a tax on an admitted input service is eligible credit to the appellant. The denial of credit is only on the ground that the Department felt that the classification of service may be more appropriate under mining services introduced w.e.f. 01/06/2007 - Without commenting on the merits of such claim, we note that the credit of tax paid on the input service irrespective of the classification cannot be denied as no provision of Cenvat Credit Rules is invoked in the original order to substantiate such denial. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of Cenvat credit on transportation charges paid for coal transportation.
2. Dispute over the tax liability classification under Goods Transport Agency (GTA) services.

Analysis:
1. The appeal challenged the order of the Commissioner of Central Excise, Bilaspur, regarding the denial of Cenvat credit to the appellants for transportation charges paid for coal transportation. The Revenue contended that the services should be taxed under mining services instead of GTA services, seeking to deny the entire credit availed by the appellants during the period March 2011 to May 2014. The Original Authority upheld the Revenue's view and imposed a penalty on the appellant in addition to ordering the reversal of credit.

2. The appellant argued that they paid service tax on GTA services on a reverse charge basis and were eligible for the credit. They maintained that the services were input services for them under the Cenvat Credit Rules, 2004. The Revenue, however, claimed that the services should be taxed as mining services, not under GTA services, and thus, the credit availed by the appellant was not entitled under the Cenvat Credit Rules, 2004.

3. The Tribunal noted that the appellant did avail transport services and paid service tax under GTA services. The denial of credit based on a different tax liability classification was deemed untenable. The Tribunal emphasized that the tax paid on an admitted input service is eligible for credit, and no provision of the Cenvat Credit Rules was invoked to justify the denial of credit.

4. Referring to a similar case involving insurance auxiliary services, the Tribunal highlighted that if the appellant was not liable to pay service tax for the services, the credit taken by them should be considered a refund of erroneously paid tax. Citing relevant legal precedents, the Tribunal held that the appellant should be entitled to a refund or credit of the tax paid on the services, even if the Revenue's classification was correct.

5. Ultimately, the Tribunal concluded that the denial of credit solely on the grounds of the service not being taxable was not sustainable. The Tribunal found no justification to deny the paid tax for credit to the appellants under the Cenvat Credit Rules, 2004. Therefore, the impugned order was set aside, and the appeal was allowed with consequential relief.