2012 (7) TMI 162 - AT - Service Tax

Re-credit of Cenvat credit service tax paid by utilising the Cenvat credit accumulated - with effect from 1.3.08, the appellant was not entitled to utilise the Cenvat credit for payment of Service Tax on GTA service and such liability was required to be discharge through cash Held that - appellants have deposited the amount in cash, which was already paid by them through Cenvat credit. With such deposit in cash, they become entitled for reversal of the credit so utilised by them for payment of the same tax amount. As such, the appellants are allowed to re-credit the amount in their Cenvat credit account. Regarding penalty Held that - there was utter confusion in the field during the relevant period and as such imposition of penalty is not justified, the same is accordingly set aside.

Summary

Issues:
1. Utilization of Cenvat credit for payment of Service Tax on goods transport agency (GTA) services.
2. Applicability of the definition of 'output services' post-amendment.
3. Re-crediting the amount in Cenvat credit account.
4. Imposition of penalty during a period of confusion.

Analysis:
1. The appellant, a manufacturer of excisable goods, utilized Cenvat credit for paying Service Tax on services received from a goods transport agency. The Revenue objected, arguing that cash should have been used instead of Cenvat credit. The Tribunal referred to a previous decision and upheld that until 1.3.08, the appellant was entitled to use Cenvat credit for such payments.

2. Post 1.3.08, an amendment excluded GTA services from the definition of 'output services.' The appellant acknowledged this change and agreed that from that date, Cenvat credit could no longer be used for Service Tax on GTA services. The confusion during the transitional period led to the initial payment through Cenvat credit, followed by a cash payment of the outstanding amount.

3. The appellant subsequently deposited the tax amount in cash, which had initially been paid through Cenvat credit. The Tribunal recognized this and allowed the re-crediting of the amount in the Cenvat credit account, considering the cash deposit as a reversal of the credit utilized.

4. Regarding the penalty imposed on the appellant, the Tribunal agreed that the confusion prevailing during the relevant period justified setting aside the penalty. As the demand up to 1.3.08 was set aside, along with the penalties, and the subsequent demand was already paid, the appellant was entitled to re-credit the amount in their Cenvat credit account. The appeal was disposed of accordingly.