Whether credit of ST paid on GTA, insurance service could be used for payment of ST on output service of Authorised Service Station?

PJ/Case law/2014-15/2277

Case:-M/s TARAN ANGAD TRADERS (P) LTD Vs COMMISSIONER OF CENTRAL EXCISE, INDORE

Citation:-2014-TIOL-1537-CESTAT-DEL

Brief facts:-The appellant are an Authorised Service Station and also a dealer of M/s. Hero Honda Motors and accordingly, are also engaged in the business of purchase and sales of new motorcycles and part thereof besides, servicing of motorcycles by maintaining an Authorised Service Station from the same premises. The period of dispute in this case is from 1.10.2004 to 30.09.2005. The point of dispute is as to whether the cenvat credit of service tax paid on the GTA service, insurance service and telephone services availed could be used for payment of service tax on the output service of Authorised Service Station. The department being of the view that these input services mainly used for purchasing of the two wheelers and their storage and sale, the same cannot be treated as input services for servicing of the two wheelers and accordingly, the appellant would not be eligible for cenvat credit in respect of these services. On this basis, the jurisdictional Dy. Commissioner vide order-in-original dated 6.10.2006 confirmed cenvat credit demand of Rs.1,30,790/- along with interest and besides this, imposed penalty of Rs.2,000/- on them under Rule 15 of the Cenvat Credit Rules, 2004. On appeal being filed to the Commissioner
(Appeals), this order of the Dy. Commissioner was confirmed by the Commissioner (Appeals) vide order-in-appeal dated 10.09.2008. Against this order of the Commissioner (Appeals), this appeal has been filed.

Appellant’s contentions:-Shri P.K. Ram, Advocate, ld. Counsel for the appellant, pleaded that the issue involved in this case stands decided in favour of the appellant by the judgement of the Tribunal in the case of Badrika Motors (P) Ltd. Vs. CCE, Bhopal [2014-TIOL-24-CESTAT-DEL], wherein the Tribunal relying upon its earlier decision in the case of CCE, Tirupathi Vs.Shariff Motors –[2009-TIOL-1571-CESTAT- BANG] and also the judgement in the case of Sri Venkanna Motors Pvt. Ltd. Vs. Asstt. Commissioner of Central Excise & Service Tax, Hyderabad 2009 (16) STR 34 (Tribunal- Bang.) has held that when M/s. Badrika Motors (P) Ltd., as an authorized service station, is also a dealer of two wheelers, they would be eligible for utilizing cenvat credit of service tax paid in respect of GTA service availed for transportation of the new Hero Honda Two Wheelers to their premises, for the payment of service tax on output services of the servicing of two wheelers provided by them in terms of their agreement with Hero Honda Motors, as in terms of the agreement, M/s. Badrika Motors (P) Ltd. was required not only to engage themselves in the sale of products and spares but also to service the two wheelers as well and it is axiomatic that no precise or mathematical correlation is required between the input and output services. He pleaded that in view of this judgement of the Tribunal, the impugned order is not sustainable.

Respondent’s contentions:-Shri Amresh Jain, ld. Departmental Representative defended the impugned order by reiterating the findings of the Commissioner (Appeals) and emphasized that services received by the appellant i.e GTA service, insurance service and telephone services have been received in connection with bringing new two wheelers, their storage and their sale and these services have no nexus with the output service of the appellant. He, therefore, pleaded that there is no infirmity in the impugned order.

Reasoning of judgment:-They have considered the submissions from both the sides.Issue involved in this case stands decided in favour of the Appellant by the Tribunal judgement in case of M/s. Badrika Motors (P) Ltd.The Tribunal relying upon earlier decision in the case of CCE, Tirupathi Vs. Shariff Motors - 2009-TIOL-1571 -CESTAT- BANG and also the judgement in the case of Sri Venkanna Motors Pvt. Ltd. Vs. Asstt. Commissioner of Central Excise & Service Tax, Hyderabad 2009 (16) STR 34 (Tribunal- Bang.)has held that when M/s. Badrika Motors (P) Ltd.,as an authorized service station, is also a dealer of two wheelers, would be eligible for utilizing cenvat credit of service tax paid in respect of GTA service availed for transportation of the new Hero Honda Two Wheelers to their premises, for the payment of service tax on output services of the servicing of two wheelers provided by them in terms of their agreement with Hero Honda Motors, as in terms of the agreement.

Decision:- Appeal allowed.

Comment:- The analogy of the case is that the cenvat credit of ST paid on the GTA service, insurance service and telephone services availed could be used for payment of ST on the output service of Authorised Service Station. According to earlier decision of the tribunal in Badrika Motors, the cenvat credit on service tax paid on GTA availed can be used for payment of service tax on output service. Rule 2(l) of Cenvat Credit Rules, 2004 “Input service” includes any service used by a service provider for providing an output service, hence credit can be availed and utilised for discharging the output service liability of Authorised Service Station.

Prepared By:- Monika Tak

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PJ/Case law/2014-15/2277

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