2018 (1) TMI 375 - AT - Service Tax

CENVAT credit - sale and servicing of vehicles - denial on the ground that the entire services on which credits have been availed by the appellant get exhausted for sale of vehicles only, which is outside the purview of output service - Held that - the appellants have given detailed chart of various services, period-wise, under 3 categories as mentioned earlier in this order. It is necessary to verify each one of the tax paid documents to identify the nature of service, whether can be attributed exclusively to taxable output services or listed under Rule 5 of the CCR or common to both trading and taxable service activity - matter on remand. GTA services - Held that - appellant are not apparently covered by any one of the 7 categories mentioned under N/N. 35/2004-ST. Further, the appellants were consignees of goods (vehicles). M/s. Maruti being a consignor have undertaken the transport using GTA and paid freight on such transport. The appellant s assertions on these facts are relevant to decide their liability under GTA service - demand set aside. Appeal allowed in part and part matter on remand.

Summary

Issues:
1. Eligibility of the appellant to avail credit on various input services.
2. Liability of the appellant to pay Service Tax on GTA services with reference to transport of vehicles.

Analysis:

Issue 1: Eligibility of the appellant to avail credit on various input services:
The appeal challenged the Commissioner of Central Excise's order denying Cenvat Credit on input services amounting to ?44,76,368. The appellant, an authorized dealer of Maruti vehicles, contended that they were engaged in both vehicle sales and servicing, submitting detailed input service categorization. The original authority disallowed the credit, stating it was all attributable to trading activity. However, the appellant argued that proportionate credit for taxable output services was permissible and provided supporting documents, which the authority allegedly ignored. The Tribunal noted the necessity of verifying each service's nature to determine eligibility and remanded the matter back for a fresh decision.

Issue 2: Liability of the appellant to pay Service Tax on GTA services:
Regarding the liability for GTA services, the appellant, a proprietorship firm, was not covered by Notification No.35/2004-ST for reverse charge basis. The original authority imposed a liability on the appellant, overlooking that M/s. Maruti, the consignor, had engaged the GTA services and paid the freight. The Tribunal found the appellant not liable for GTA services and set aside the original order based on these facts.

In conclusion, the Tribunal remanded the matter to the original authority for re-examining the appellant's entitlement to input service credit while determining that the appellant was not liable to pay service tax under GTA services. The impugned order was set aside for reassessment of input service eligibility, emphasizing the need for detailed verification and correct categorization of services.