2018 (1) TMI 52 - HC - Service Tax

CENVAT credit - input services - GTA services for transporting final products from the factory of the respondent to three premises - Held that - the Tribunal held that the issue is covered in favor of the assessee as per the decision of the Karnataka High Court in COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX, BANGALORE Versus M/s ABB LTD. and others 2011 (3) TMI 248 - KARNATAKA HIGH COURT , where it was held that Credit of service tax paid on outward transportation allowed prior to 1.4.2008 - appeal dismissed.

Summary

Issues:
Denial of Cenvat credit for GTA services transporting final products beyond the factory; Interpretation of "place of removal" under Cenvat Credit Rules, 2004; Tribunal's decision in favor of the assessee based on Karnataka High Court precedent.

Analysis:
The case involved the denial of Cenvat credit for GTA services used to transport final products from the factory to various premises. The dispute centered on whether the factory could be considered a "place of removal" under the Cenvat Credit Rules, 2004, affecting the eligibility for credit on outward transportation beyond the factory. The department's demand was based on this premise, leading to confirmation by the authorities.

Upon review, the Tribunal, considering the facts, arguments, and the Karnataka High Court's precedent, ruled in favor of the assessee. The Tribunal's decision was influenced by the Karnataka High Court's judgment in a similar case, which reversed the Tribunal's earlier ruling. The Tribunal's reasoning primarily focused on establishing the identity of the "place of removal" to determine credit eligibility, taking into account the contractual arrangements between the assessee and its customers.

The High Court, after examining the Tribunal's findings and the nature of the contractual relationships, concluded that the Tribunal's decision to grant credit to the assessee was justified. The Court emphasized that no substantial question merited a different outcome in favor of the revenue based on the established facts. Consequently, the appeal filed by the revenue was dismissed, upholding the Tribunal's decision in favor of the assessee.

In summary, the High Court upheld the Tribunal's decision, affirming the assessee's entitlement to Cenvat credit for GTA services beyond the factory based on the interpretation of the "place of removal" and supported by the Karnataka High Court precedent. The judgment emphasized the importance of factual considerations and contractual arrangements in determining credit eligibility under the Cenvat Credit Rules, 2004, ultimately dismissing the revenue's appeal.