2008 (3) TMI 175 - AT - Service Tax

Whether credit could be availed of the duty paid on input capital goods & the Service tax paid on input services as a manufacturer of excisable goods & be utilized towards payment of Service Tax on service availed from GTA - appellant will be deemed to be an output service provider so he is entitled to avail credit towards payment of tax on the output service and, therefore, the impugned order directing the appellant to pay Service tax in cash is not in accordance with law stay granted

Summary

Issues:
- Whether Cenvat credit can be utilized for payment of Service tax on service availed from goods transport agency.

Analysis:
The appeal in question pertains to the waiver of pre-deposit and stay regarding the requirement for the appellant to pre-deposit Service Tax and interest. The central issue revolves around the utilization of Cenvat credit for the payment of Service tax on services obtained from a goods transport agency. The interpretation of Rule 3(4) of the Cenvat Credit Rules, 2004 is crucial in determining the applicability of Cenvat credit for such payments. The definition of 'output service' as per Rule 2(p) of the Rules is vital, which states it as "any taxable service provided by the provider of taxable service." The term 'provider of taxable service' is defined in Rule 2(r) to include "a person liable for paying Service tax." As the appellant is liable to pay Service tax for services received from the goods transport agency, they are deemed to be the provider of taxable service by law. Consequently, the service provided by the appellant is considered an output service under the Rules. This legal position supports the appellant's entitlement to utilize Cenvat credit for the payment of Service tax on the output service.

The Tribunal, comprising Justice S.N. Jha and Shri M. Veeraiyan, after thorough consideration, opined that the appellant is indeed entitled to a full waiver of the pre-deposit requirement. The Tribunal allowed the stay application, indicating a favorable decision in favor of the appellant. The judgment was dictated and pronounced in open court on the 14th day of March 2008. The decision, delivered by Justice S.N. Jha, President of the Tribunal, highlights the legal interpretation supporting the appellant's right to utilize Cenvat credit for the payment of Service tax, ultimately leading to the granting of the waiver and stay application.