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TMI Blog2013 (8) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... ture an excisable product – the GTA service so received by the respondents would have been covered under the definition of "input service" under Rule 2(1) of Cenvat Credit Rules. By virtue of the explanation, it shall be deemed to be "output service" even after deletion of the explanation given at Rule 2(p) read with definition given at Rule 2(q) and (r) convey similar meaning" - Held that:- There was no error in the reasoning of the Tribunal that in the payment of service tax liability by the recipient of taxable service - assesses were also entitled to make use of CENVAT Credit to discharge their liability under the Service Tax provisions – A reading of Rules 2(l) and 2(b) would show that they cover two different situations and though their operations were totally different - for the purpose of giving credit to the service tax payable from the CENVAT Credit available - the recipient was also entitled to the same relief as a provider of the service – while Rule 2(l) and 2(p) cover two classes of persons, the recipient of GTA services, by virtue of the Explanation to Rule 2(p) of the CENVAT Credit Rules, as a provider of output service, was entitled to all benefits that a person p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 73 of Chapter V of Finance Act, 1994 along with interest under Section 75 of the Finance Act, apart from proposing levy of penalty under Section 76 of the Act. 3. Aggrieved by the order of the adjudicating authority, the assessee went on appeal before the Commissioner of Central Excise (Appeals), contending that the understanding of the Revenue that the service would fall within the definition of output service in view of explanation to Rule 2(p) of CENVAT Credit Rules, 2004 was contrary to law. Consequently, the order denying the CENVAT Credit as available for payment of the service tax was held as bad in law. The first Appellate Authority pointed out that going by Section 68(2) of Chapter V of Finance Act, 1994, the recipient of GTA services was also treated as deemed provider of services. Thus, there could no dispute that the assessee was liable to pay service tax from 1.1.2005 to 30.9.2005. The Commissioner pointed out that as far as the quantum of service tax liability was concerned, there was no dispute. The Adjudicating Authority denied the facility utlising CENVAT Credit on the simple ground that the activity of the assessee would fall under Rule 2(p) of CENVAT Cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the said decision, the High Court upheld the order of the Tribunal. Pointing out to Rule 3(4)(e) of the Cenvat Credit Rules 2004, the High Court held that Cenvat Credit could be utilized for payment of service tax on any output service. The said decision was followed by the Delhi High Court in the decision reported in 2013 (29) STR 358 COMMISSIONER OF SERVICE TAX v. HERO HONDA MOTORS LIMITED and 2012 (26) S.T.R. 413 COMMISSIONER OF CENTRAL EXCISE v. AURO SPINNING MILLS. The Delhi High Court pointed out that in view of the fiction created under Section 68(2) of the Finance Act, 1994, that the recipient of the services who discharged the liability on behalf of the provider was also treated as a person liable to pay service tax in relation to such service. Thus, in view of the fiction under Section 68(2) of the Finance Act with the CENVAT Credit Rules, the High Court agreed with the decision reported in the case of NAHAR INDUSTRIAL ENTERPRISES LIMITED reported in 2007-TIOL 555- CESTAT DELHI. 6. Learned standing counsel for the Revenue however pointed out that NAHAR INDUSTRIAL ENTERPRISES LIMITED reported in 2007-TIOL 555- CESTAT DELHI is now pending in appeal before the Apex C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by a provider of taxable service for providing an output service, or (ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal, and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal; Rule 2(p), on which heavy reliance placed by the Revenue, defines output service , which reads as under:- 2(p) output service means any taxable service provided by the provider of taxable service, to a customer, client, subscriber, policy holder or any other person, as the case may be, and the expressions 'provider' and 'provi ..... 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