2024 (5) TMI 374 - AT - Service Tax

CENVAT Credit - services provided by Container Corporation of India Ltd. during the period from June, 2015 to March, 2016 on GTA Service - liability of Service Tax on amounts paid to East Central Railways. CENVAT Credit - GTA Services - HELD THAT - The Appellant exported its final products i.e. Carbon Black from JNPT, Mumbai via ICD Kanpur in respect of which M/s Container Corporation of India Ltd. charged GTA Services from ICD Kanpur to JNPT, Mumbai - the issue is no more res integra and is squarely covered by the judgement of Hon ble Gujarat High Court in the case of CENTRAL EXCISE VERSUS INDUCTOTHERM INDIA P LTD 2014 (3) TMI 921 - GUJARAT HIGH COURT . Hon ble High Court while considering the issue of admissibility of Cenvat credit of Service Tax paid on Cargo Services, held that any service availed by the Exporter, until the goods left India from the port, shall be considered as services used in relation to clearance of final products upto the place of removal - it is the Appellant and not the Container Corporation of India Ltd. who continued to remain owner of the goods till the goods are exported. Therefore, the place of removal would be JNPT Mumbai and not ICD Kanpur. The Appellant has rightly availed Cenvat credit on Service Tax paid on GTA from ICD Kanpur to JNPT, Mumbai - demand on account of Cenvat credit amounting to Rs.98,765/- alongwith interest is set aside, penalty of Rs.49,383/- imposed under Rule 15(2) of Cenvat Credit Rules is also set aside. Liability of Service Tax on amounts paid to East Central Railways - HELD THAT - The railway crossing in question is used not only by the Appellant but also by residents of the colonies and also by industries situated in the adjoining areas. That in the aforesaid background, during the period 2014-15 2015-16, Appellant paid an amount of Rs.14,22,468/- and Rs.14,61,966/-respectively to East Central Railways as recovery of wages of two gate keepers of railway crossing. As the charges were not in respect of any service provided by Railways to Appellant, hence neither Railways charged service tax on the same, nor Appellant paid service tax under reverse charge mechanism - East Central Railway has not provided any service to the Appellant under the category of Business Support Services as alleged by the Department and Railways was performing statutory obligation by way of constructing a railway crossing and posting of two gatemen. The payment made by the Appellant to the Railways during the period 2014-15 to 2015-16 does not attract any Service Tax liability and the Appellant was not required to discharge Service Tax under reverse charge mechanism. Thus, the demand of Rs.6,76,049/- alongwith interest and penalty of Rs.3,38,025/- is set aside. The impugned order is set aside - appeal allowed.

Summary

Issues involved: Admissibility of Cenvat credit on GTA service and liability of Service Tax on amounts paid to East Central Railways.

Admissibility of Cenvat credit on GTA service: The appeal challenged an Order-in-Appeal regarding the admissibility of Cenvat credit on services provided by Container Corporation of India Ltd. for transporting final products. The Tribunal referred to a judgment of the Gujarat High Court, stating that services availed by the exporter until goods leave India shall be considered as used in relation to clearance of final products. Since the Appellant remained the owner of the goods until export, the place of removal was deemed to be JNPT Mumbai, not ICD Kanpur. Therefore, the Appellant rightfully availed Cenvat credit on the Service Tax paid for the transportation service. The demand for Cenvat credit, along with penalties, was set aside.

Liability of Service Tax on amounts paid to East Central Railways: The case involved payments made by the Appellant to East Central Railways for the construction and maintenance of a railway crossing. The Tribunal found that the services provided by the two gatekeepers were under the control of Railways and were part of Railways' statutory function to provide safe access to the public. As such, the payment made by the Appellant did not attract any Service Tax liability, and the Appellant was not required to pay Service Tax under reverse charge mechanism. Therefore, the demand for Service Tax and penalties related to these payments were set aside.

In conclusion, the appeal was allowed in favor of the Appellant with consequential relief, if any. The Order was pronounced on the 6th of May, 2024.