Cenvat Credit eligibility on network services and GTA.

PJ/CASE LAW/2015-16/2911

Case:- COMMISSIONER OF S.T., CHENNAI VERSUS DOOSAN INFRACORE (I) PVT. LTD.

Citation:-2015 (40) S.T.R. 623 (Tri. - Chennai)

Issue:- Cenvat Credit eligibility on network services and GTA.

Brief facts:- The assessee’s appeal is against disallowance of Cenvat credit of Rs. 2,51,666/- covered by show cause notice No. 217/2012, dated 24-4-2012. This is on account of network services availed by the appellant held to be not attributable to the output service provided, whereas the learned counsel submits that it has direct nexus since the appellant is engaged in the management, maintenance & repair services of heavy engineering and I.T network services were used in the input services for which expenditure incurred by appellant has suffered service tax.

Appellant’s contention:- The appeal is taken up today for disposal as the matter is on limited compass. The question involved is whether the service tax paid on network service availed by the appellant for its computer network to provide input service for generation of output service of management, and repair of heavy machinery, shall entitle the assessee to the Cenvat credit of that tax. The network services availed by the appellant to make its own mail/server functional having its integral connection to generate the output service is a tool for such output service. Therefore, appellant deserves relief on this count. Revenue’s both the appeals are trying to disallow the relief granted on account of network service availed by the appellant which is of the nature aforesaid. In view of the factual and legal position above, Revenue’s appeals on this count is dismissed.
The second grievance of Revenue is that the taxes paid for GTA service availed is not permissible as cenvat credit to the assessee. But learned authority below found that Rs. 6,09,756/- towards service tax on GTA is covered by SCN No. 50/2011, dated 14-3-2011 having been discharged by the assessee, it claimed benefit of Cenvat credit to that extent only. Ld. Counsel submits today that as an abundant caution, the said amount of Rs. 6,09,756/- has also been reversed. Therefore, Revenue’s contention on this count of Cenvat credit on GTA service fails for which Revenue’s appeal is dismissed.
The next grievance of Revenue is against allowance of credit to the extent of Rs. 1,54,565/- under GTA service covered by SCN No. 50/2011, dated 14-3-2011 which ought to have been paid by the appellant but not by the transporter. Learned Commissioner (Appeals) verified that transport service provider was registered and has discharged tax liability of the said amount verifiable from the invoices. He has also noticed that service provider has discharged this amount of service tax. Accordingly, he held that there cannot be double taxation for which appellant-assessee should get the relief.
In absence of any contrary evidence as to the deposit of that amount of service tax by the GTA service provider, learned Commissioner (Appeals) has reached to a proper conclusion for which the Revenue’s appeal on this count is dismissed.

Respondent’s contention:- The Learned AC has been appeared on the behalf of respondent.

Reasoning of judgment:- The service tax element of Rs. 6,09,756/- covered by SCN No. 50/2011, dated 14-3-2011 and ` 10,46,675/- covered by SCN No. 217/2012, dated 24-4-2004 relate to GTA service, being of the nature above followed by reversal already done by assessee as abundant caution, Revenue fails on this count.
In the result, Revenue’s both the appeals are dismissed and assessee’s appeal is allowed. Stay applications stand disposed of accordingly.

Decision:-Revenue’s Appeal dismissed/Assessee’s appeal allowed

Comment:-The analogy of the case is that Network service is availed by appellant for its computer network to provide input service for generation of output service of management and repair of heavy machinery. Network services availed by appellant to make its own mail/server functional having its integral connection to generate the output service is a tool for such output service. Hence Cenvat credit will be available.
On other side, GTA service which ought to have been paid by the appellant but not by the transporter. It is verified that transport service provider was registered and has discharged tax liability of amount verifiable from the invoices. There cannot be double taxation for which appellant-assessee should get the relief. In absence of any contrary evidence as to the deposit of amount of service tax by GTA service provider, Commissioner (Appeals) has reached to a proper conclusion in allowing cenvat credit to the appellant.

Prepared by:- Monika Tak

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PJ/CASE LAW/2015-16/2911

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