2013 (11) TMI 1506 - AT - Service Tax

CENVAT Credit of service tax paid of GTA service - Retreading of tyres - Goods Transport Agency service - Held that - any test with reference to place of removal cannot be applied in the case of output service because said expression is defined in Central Excise Act and has relevance for the purpose of paying excise duty. In the case of services which are intangible, place of removal cannot be determined easily and the expression place of removal defined in Central Excise Act for determining excise duty payable cannot apply. I am also not in agreement with the argument that transportation of tyres to and fro from the place of repair has no nexus with the output service because the service is undertaken as per the contract. Therefore, I am of the view that the case law quoted by the Ld. AR in the matter of excisable goods is not relevant to the facts of this case. In the circumstances, I set aside the orders of the lower authorities and allow the appeal holding that Cenvat credit on the GTA service will be available to the appellant - Decided in favour of assessee.

Summary

Issues:
Denial of Cenvat credit on tax paid under Goods Transport Agency service.

Analysis:
1. The appellant, engaged in re-treading of tyres, faced a demand for service tax due to the denial of Cenvat credit on the transportation of goods under reverse charge mechanism. The Revenue contended that such credit was not covered under the definition of 'input service' as per CENVAT Credit Rules, 2004, leading to a show cause notice and subsequent confirmation of the demand by the adjudicating authority.

2. The appellants appealed to the Commissioner (Appeals) but did not receive any relief, prompting them to approach the Tribunal for redressal. The argument put forth was that transportation service was essential for providing re-treading service, as per the terms of the contract with clients. The appellant maintained that since service tax was paid on the value of services inclusive of transportation costs, Cenvat credit should not be denied.

3. The appellant's advocate emphasized that the concept of 'place of removal' in the CENVAT Credit Rules, 2004, primarily applicable to excisable goods, was not relevant in the context of output services. He argued that transportation of goods was integral to fulfilling the service contract, and hence, Cenvat credit should be allowed. The Revenue, however, relied on precedents and the amended definition of 'input service' post-31-3-2008 to oppose the appellant's claim.

4. The Tribunal, after considering the arguments, ruled in favor of the appellant. It held that the 'place of removal' criterion was not applicable to output services, as it pertained to excise duty payment. The Tribunal disagreed with the Revenue's reliance on case laws related to excisable goods, asserting that such precedents were not directly relevant to the present case involving services. Consequently, the Tribunal allowed the appeal, setting aside the lower authorities' orders and affirming the availability of Cenvat credit on the Goods Transport Agency service for the appellant.