2010 (2) TMI 452 - AT - Service Tax

Cenvat Credit - The appeal filed by the Revenue, the grounds taken are that the manufacturer M/s. Hero Honda Motors Ltd. who appointed the respondent as an authorized dealer arranges to deliver the vehicle at the premises of the respondents at its own cost. The respondents, therefore, did not incur freight and were not required to pay the service tax under GTA.Held that - since assessee had paid service tax under category of GTA to department, it was entitled to avail Cenvat Credit of same.

Summary

Issues:
- Entitlement to Cenvat credit for transportation of new two wheelers
- Interpretation of service tax payment under GTA services
- Validity of availing credit of service tax paid by the respondent

Entitlement to Cenvat credit for transportation of new two wheelers:
The Commissioner (Appeals) allowed the respondents to take Cenvat credit for the transportation of new two wheelers for sale from their premises, following a previous Tribunal decision. The Tribunal had held that the respondents were entitled to credit of service tax paid under the category of 'GTA services' and could use it for discharging tax on output services provided. The Revenue contended that since the manufacturer arranged delivery at the respondent's premises at its own cost, the respondent did not incur freight and was not required to pay service tax under GTA. However, the Tribunal found that the respondents had indeed paid service tax under GTA and were entitled to avail credit of the same, leading to the rejection of the Revenue's appeal.

Interpretation of service tax payment under GTA services:
The crux of the issue revolved around the interpretation of service tax payment under GTA services in the context of the transportation of new two wheelers for sale. The Revenue argued that since the manufacturer bore the delivery cost to the respondent's premises, the respondent did not bear the freight and thus should not have paid service tax under GTA. However, the Tribunal upheld the Commissioner (Appeals) decision, emphasizing that the respondents had paid the service tax and were eligible to avail credit for the same, as per the Tribunal's previous ruling and the provisions governing Cenvat credit.

Validity of availing credit of service tax paid by the respondent:
The Tribunal examined the validity of the respondent availing credit for the service tax paid under GTA. After considering arguments from both sides, the Tribunal found that since the respondents had indeed paid the service tax, they were entitled to avail credit for the same. The Tribunal concluded that there was no justification to interfere with the impugned order, leading to the rejection of the stay application and appeal filed by the Revenue. This decision reaffirmed the principle that if service tax is paid, the entity is entitled to avail credit for the same, regardless of the specific circumstances of the transaction.