2012 (8) TMI 651 - HC - Central Excise

Cenvat credit Held that - Service tax is paid on transportation charges fell within the phrase clearance of final products from the place of removal and therefore, the assessee was entitled to Cenvat credit - in favour of the assessee

Summary

Issues:
1. Appellant's challenge to Tribunal's order on service tax liability under GTA category.
2. Interpretation of statutory provisions and Finance Minister's speech.
3. Applicability of service tax under the category of Goods Transport Agency.

Analysis:
1. The appeal was filed by the revenue against the Tribunal's decision that the assessee is not liable to pay service tax under the Goods Transport Agency (GTA) category. The assessee, a partnership firm involved in exporting iron ore, had received services from various Goods Transport Operations. The revenue claimed that the assessee had underpaid service tax amounting to Rs. 92,51,572 for the period from 1-1-2005 to 28-2-2007. The assessing authority concluded that the services received were taxable under Transport of Goods by Road Services. The Tribunal, however, based on the definition of GTA and the Finance Minister's clarification in the Budget Speech, ruled in favor of the assessee, stating that they are not liable to pay service tax under the GTA category.

2. The appeal raised substantial questions of law regarding the correctness of the CESTAT's decision. The questions focused on whether the CESTAT was right in basing its decision solely on the Finance Minister's speech instead of statutory provisions, and whether the respondents were truly exempt from paying service tax under the GTA category. The Court considered the statutory provisions of Section 65(105)(zzp), Section 65(50b), Rule 2(1)(d)(v) of the Service Tax Rules, 1994, and Notification No. 35/2004-S.T. dated 3-12-2004. The Court deliberated on whether the assessee was correctly absolved from paying service tax as claimed.

3. The Court referred to a previous Division Bench decision where it was established that service tax paid on transportation charges fell within the scope of "clearance of final products from the place of removal," allowing the assessee to claim Cenvat credit. Consequently, the Court concluded that the substantial questions of law were resolved in favor of the assessee against the revenue. The judgment highlighted the interpretation of statutory provisions, the Finance Minister's speech, and the definition of Goods Transport Agency to determine the liability of the assessee for service tax under the GTA category.