2007 (10) TMI 161 - AT - Service Tax

Rule 2(p) cenvat credit rules appellants are entitled to utilize the credit in respect of input service towards payment of service tax on GTA services, which is an output service by definition

Summary

Issues:
1. Whether the appellants were liable to pay interest on the service tax amount paid by cash after utilizing Cenvat credit for GTA services.

Analysis:
The appellants paid service tax on GTA services using Cenvat credit, which the Department objected to, leading the appellants to pay the entire amount by cash. The issue revolved around whether interest was payable on the cash payment. The appellants argued that Rule 2 of the Cenvat Credit Rules, 2004, classified GTA service as an output service, allowing Cenvat credit utilization for service tax payment. They cited various Tribunal decisions supporting their stance, emphasizing the legality of their initial payment method.

The Department did not contest the stay but requested a separate hearing date for the regular appeal. However, the Tribunal, after considering the case records and the cited decisions, concluded that the appellants' situation aligned with the Tribunal precedents. They found no merit in the Department's request for a separate hearing, determining that the appellants were within their rights to use available credit for paying service tax on GTA services. Consequently, the Tribunal set aside the impugned order and allowed the appeal, highlighting the appellants' entitlement to credit utilization based on the cited precedents.

In summary, the judgment addressed the issue of interest liability on cash payment after utilizing Cenvat credit for GTA services. The Tribunal upheld the appellants' right to use credit for service tax payment, following precedents and dismissing the Department's request for a separate hearing. The decision favored the appellants, emphasizing the legality of their initial payment method and setting aside the impugned order.