2017 (9) TMI 294 - AT - Service Tax

Mode of tax payment - utilisation of CENVAT credit - GTA service - The department asked the appellant to pay the tax by way of PLA (in cash) and not by adjusting CENVAT Credit - Held that - the identical issue has come up in the case of Commr. of Central Excise, Indore Vs. Spendex Industries Ltd. 2012 (5) TMI 513 - CESTAT, NEW DELHI , where it was held that Cenvat credit can be utilised towards payment of Service Tax in respect of services received from Goods Transport Agency inasmuch as by a deemed fiction of law service recipient is held to be output service provider - appeal allowed - decided in favor of appellant.

Summary

Issues involved: Appeal against Order-in-Appeal regarding payment of service tax by adjusting CENVAT Credit instead of cash.

Analysis:

Issue 1: Payment of service tax by adjusting CENVAT Credit
The appellant received goods from a goods transport agency and paid the tax under Rule 2(1)(d)(v) of the Service Tax Rules, 1994 by debiting the CENVAT Credit amount. The department demanded cash payment instead of adjusting the credit. The Tribunal referred to a similar case where it was held that the recipient of services from the goods transport agency is liable to pay service tax and is considered a provider of taxable service under Rule 2(r), falling under the definition of output service in Rule 2(p). The Tribunal noted that the deletion of an explanation from Rule 2(p) would not affect this liability. The Tribunal also distinguished a Single Member decision from a Division Bench judgment, ultimately rejecting the Revenue's appeal and allowing the appellant's appeal based on previous decisions.

Conclusion:
The Tribunal set aside the impugned order and allowed the appeal, maintaining that the appellant's payment of service tax by adjusting CENVAT Credit was justified under the law.