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PJ/Case Laws/2011-12/1239

service tax on GTA can be paid through utilization of the CENVAT credit
 
Case:-Commissioner of Central Excise, Salem versus M/s M/s Victory Spinning Mills Ltd

Citation:-2011-TIOL-837-CESTAT-MAD

Issue:- Whether service tax on GTA can be paid through utilization of  the CENVAT credit?

Brief Facts:-The respondent is a manufacturer of man-made yarn and had availed the services of Goods Transport Agency (GTA).They have paid service tax on GTA services through the CENVAT credit.
Original authority held that for payment of service tax on such input services, CENVAT credit cannot be utilized as envisaged in Rule 3(4)(e) of CENVAT Credit Rules, 2004. He accordingly confirmed service tax demand along with interest and imposed penalties under Section 76 and 77 of the Finance Act, 1994.
The assessees filed appeals before the Commissioner (Appeals), who allowed the appeals of the party.
Hence the revenue has filed this appeal.

Reasoning of the Judgment: It is fairly accepted that the issue relating to utilisation of credit for payment of service tax on GTA services as recipient stands decided by the Tribunal in favour of the assessee in the case of Commissioner of Central Excise, Belgaum Vs M/s.Shri Tubes & Steels Pvt. Ltd. It was also agreed that based on the said decision, several appeals have been disposed of in favour of the party in the case of M/s. Iswari Spinning Mills & Ors.

Decision: Appeal is rejected.

Comments:- There has been numerous cases on the issue that CENVAT credit can be utilized for the purpose of payment of service tax on GTA or not and most of the cases are against the department. GTA service is out of ambit of output service from 01.03.2008 which means that service tax on freight is to be paid in cash from 1.3.2008. There is no dispute after this date. There was dispute prior to this date. However, this dispute of payment of service tax as recipient of service from cenvat credit is continuing on import of service.

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