2018 (6) TMI 259 - AT - Service Tax

Utilization of CENVAT credit - service tax on GTA Service - Payment of service tax by debiting CENVAT credit account - output service - GTA Service - appellant contended that till 21.4.2006, GTA service was deemed to be output service (before issue of N/N. 21/2006-CE NT) hence, utilization of CENVAT credit is proper - Held that - Before the omission of Explanation to Rule 2(p) of the CENVAT Credit Rules by N/N. 21/2006-CE (NT) by N/N. 21/2006-CE (NT), GTA services were deemed to be output service, therefore, there was no bar on the utilization of CENVAT credit for payment of such service tax - Abatement on GTA Services - N/N. 32/2004-ST dated 3.12.2004 and N/N. 1/2006-ST dated 1.3.2006 - It was alleged that the appellants paid service tax on behalf of GTAs without having such declaration or endorsement on the consignment note to the effect that they have not availed CENVAT credit - Held that - Admittedly, the owners of tempos, who carried out transportation for the appellants were not registered with the Central Excise or Service Tax department; therefore, the question of availment of CENVAT credit by them is a misnomer, there was no way that they could have availed the credit. Therefore, mere absence of endorsement on the invoices does not make the appellants ineligible for the availment of the substantial benefit i.e., abatement. The lower authorities have not appreciated all the issues raised therein by the appellants and there have been calculation errors also. In these circumstances, it will be in the interest of justice that the issue should be verified again with available documents and reliefs as claimed by the appellant be allowed to them - appeal allowed by way of remand.

Summary

Issues:
(i) Whether debit through CENVAT account for discharge of service tax liability by the receiver of GTA service is permissible;
(ii) Whether the appellant is eligible to claim abatement; and
(iii) Whether there is an excess payment as claimed by the appellant and if so, whether it can be allowed as a refund in the absence of a separate claim for such refund.

Analysis:
1. The case involved a dispute regarding the payment of service tax on GTA services by an appellant. The core issues to be considered were the permissibility of debit through CENVAT account for service tax liability, eligibility of the appellant for claiming abatement, and the excess payment claimed by the appellant for refund.

2. The appellant argued that the lower authorities failed to understand the definition of GTA and the conditions for availing abatement. They contended that transportation by tempos and autos for local trips did not require consignment notes, and the intent of the law was not to tax small transporters. The appellant also highlighted that CENVAT credit could not be availed without registration with the Central Excise or Service Tax department.

3. The Tribunal noted that before the omission of an explanation to the CENVAT Credit Rules, GTA services were deemed as output services, allowing the utilization of CENVAT credit for service tax payment. The Tribunal also emphasized that the absence of endorsements on invoices from non-registered transporters did not disqualify the appellant from claiming abatement.

4. It was observed that the lower authorities had not fully considered all issues raised by the appellant and made calculation errors. Therefore, the Tribunal allowed the appeal by remanding the case for re-verification of documents and granting the relief sought by the appellant, including the refund of excess duty paid and re-credit of CENVAT credit debited.

5. In conclusion, the Tribunal directed a re-examination of the case to ensure justice, emphasizing the need for a thorough review of the calculations and the proper consideration of the appellant's claims for refund and re-credit of CENVAT credit. The appeal was allowed for further assessment and resolution of the issues raised by the appellant.