2023 (10) TMI 595 - AT - Service Tax

Demand of service tax - GTA service under reverse charge mechanism - service provider i.e. Transport Agency has already paid the service tax on the GTA Service - CENVAT credit in respect of the service tax paid by the transport agency - HELD THAT - Even though legally the appellant is liable to pay the service tax but in the facts of the present case the transport agency has admittedly paid such service tax. The assessment of payment of service tax by the transport agency has not been disputed by their jurisdictional officer, therefore no question can be raised as regard the service tax payment and assessment thereof at the end of the transport agency. If this be so, then the payment of service tax by the goods transport agency was made good as payment of service tax therefore, the demand against the appellant for the same service will amount to demand of service tax twice on the same service which in any case is not permissible - once the payment of service tax was made by the transport agency which has not been altered by taking any action by the department, the cenvat credit of the said amount is also rightly available to the appellant. Once the service provider discharged the service tax where the service recipient is liable to pay the service tax, demand of service tax on the same service from the service recipient shall not sustain on the ground that the particular service which already suffered the service tax cannot be suffer the service tax twice on the same service. Accordingly, the service tax paid by the transport agency in the facts of the present case is the payment of service tax and not deposit. Therefore, no demand can be raised from the appellant, for the same reason once the amount paid by the transport agency being service tax amount, the appellant is eligible for cenvat credit. The impugned order is not sustainable. Hence, the same is set aside. Appeal is allowed.

Summary

Issues Involved:
1. Liability of the appellant to pay service tax on Goods Transport Agency (GTA) services under the reverse charge mechanism (RCM) when the service provider has already paid the service tax.
2. Entitlement of the appellant to Cenvat credit for the service tax paid by the transport agency.

Summary:

Issue 1: Liability to Pay Service Tax on GTA Services Under RCM
The department argued that the appellant, as the recipient of GTA services, is liable to pay service tax under RCM as per Rule 2(i)(d)(v) of the Service Tax Rules, 1994. The service tax paid by the goods transport agency (GTA) is considered a deposit, making the appellant liable to pay the service tax. The appellant contended that demanding service tax from them when the transport agency has already paid it amounts to double taxation, which is not legal. The tribunal found that although the appellant is legally liable to pay the service tax, the transport agency had already paid it, and this payment was not disputed by the jurisdictional officer. Therefore, demanding service tax from the appellant would result in double taxation, which is impermissible. The tribunal concluded that the revenue cannot demand the same amount twice.

Issue 2: Entitlement to Cenvat Credit
The department also argued that since the payment made by the transport agency is considered a deposit, the appellant is not entitled to Cenvat credit. The appellant argued that since the transport agency paid the service tax and the assessment was not challenged, they are legally entitled to the credit. The tribunal agreed, stating that since the service tax payment by the transport agency was valid and not altered by the department, the appellant is entitled to Cenvat credit. The tribunal cited multiple judgments supporting the view that service tax paid by the transport agency satisfies the tax liability, and no further tax can be demanded from the service recipient. Consequently, the appellant is eligible for Cenvat credit for the service tax paid by the transport agency.

Conclusion:
The tribunal set aside the impugned order on both counts, ruling that the appellant is not liable to pay service tax on GTA services under RCM when the transport agency has already paid it, and the appellant is entitled to Cenvat credit for the service tax paid by the transport agency. The appeal was allowed.

Pronouncement:
The judgment was pronounced in the open court on 11.10.2023.