2018 (8) TMI 814 - AT - Service Tax

GTA Services - case of Revenue is that deduction claimed by the appellant is not correct as the transport agencies have not given specific certificate as to whether they had availed the CENVAT credit or not on the motor vehicles procured by them - whether the differential Service Tax liability as confirmed by the adjudicating authority on the appellant is correct or otherwise? - Held that - The appellant had produced the general declarations filed by the various service providers who had specifically stated in the declaration that they had not availed credit of duty paid on inputs or capital goods while rendering the services of goods transport agency. These certificates are not disputed by the adjudicating authority but were summarily dismissed as being general in nature and not specific to consignments - impugned order has erred i holding so. In the case of Lykes Line Ltd 2016 (11) TMI 192 - CESTAT MUMBAI , similar issue came for consideration, where it was held that Once a transport agency gives the declaration that they are not availing the Cenvat credit, that means they are not availing Cenvat credit in all the transactions. Therefore, individual consignment need not bear such declaration. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Differential Service Tax liability on freight charges under reverse charge mechanism.

Analysis:
The appeal revolved around the correctness of the Service Tax liability confirmed by the adjudicating authority on the appellant concerning the payment made towards freight charges during a specific period. The appellant had paid the Service Tax based on Notification No.32/2004-ST, claiming a 75% deduction on the freight charges and paying the tax on the remaining amount. However, the adjudicating authority disputed this deduction, citing the lack of specific certificates from the transport agencies regarding their utilization of CENVAT credit on procured motor vehicles.

During the proceedings, the appellant presented declarations from service providers confirming the non-availment of CENVAT credit, which were dismissed by the adjudicating authority as general and not specific to consignments. The appellant argued that the issue had been settled in previous Tribunal decisions such as Lykes Line Ltd and Yash Paper Ltd, emphasizing that the certificates provided were sufficient evidence of non-availment of CENVAT credit, as per the Exemption Notification 32/2004-S.T.

The Tribunal noted that the facts were undisputed, focusing on the demand for the differential Service Tax liability based on the claimed 75% abatement from the freight charges. It was observed that the certificates produced by the appellant from service providers explicitly stated the non-utilization of duty credit on inputs or capital goods, which the adjudicating authority had acknowledged but dismissed as general in nature. The Tribunal referenced the decision in Lykes Line Ltd, where a similar issue was addressed, emphasizing that the Exemption Notification did not require specific declarations on each consignment note and that the denial of the exemption based on such grounds was incorrect.

Consequently, the Tribunal found the impugned order unsustainable and ruled in favor of the appellant, setting aside the adjudicating authority's decision and allowing the appeal with consequential relief. The judgment highlighted the importance of the certificates provided by the service providers as sufficient evidence of non-availment of CENVAT credit, in line with the provisions of the Exemption Notification, ultimately leading to the favorable outcome for the appellant.