Whether interest payable on wrong discharge of service tax under GTA by utilizing credit?

PJ/Case Law /2016-17/3244

Case:- AMRIT EXPORT (P) LTD. VERSUSCOMMISSIONER OF CENTRAL EXCISE, KOLKATA

Citation:-2016 (43) S.T.R. 248 (Tri. - Kolkata)

Brief Facts:-This appeal has been filed by the appellant against OIA No. 244/ST/KOL/2011, dated 5-8-2011 passed by Commissioner (Appeals-I), Kolkata. The issue under consideration is whether service tax liability under GTA service can be discharged by utilizing cenvat credit.

Appelants Contention:- Sh. Asit Roy Authorized Representative of the appellant appeared for personal hearing and argued that appellant utilized accumulated Cenvat credit while discharging Service Tax liability from Cenvat credit on GTA Services under reverse charge mechanism. That appellant wrote to the department and sought for a clarification whether the procedure adopted by them is correct or not. That appellant paid Service Tax on GTA Service after availing exemption of 75% from gross value charged by GTA. That no interest is leviable as the entire Cenvat credit taken was reversed. It was his case that case law of Apex Court in the case of UOI v. Ind. Swift Laboratories [2011-TIOL-21-SC-CX = 2012 (25) S.T.R. 184 (S.C.) = 2011 (265) E.L.T. 3 (S.C.)] is not applicable to the present factual matrix in view of case law CCE v. Maruti Udyog Limited [2006-TIOL-308-HC-P&H-CX], CCE v. Bombay Dyeing & Mfg. Corporation Ltd. [2007-TIOL-141-SC-CX = 2007 (215) E.L.T. 3 (S.C.)] and CCE, Madurai v. Strategic Engineering (P) Ltd. [2014 (310) E.L.T. 509 (Mad.)].

Respondent Contention:- Sh. K. Choudhari, Supdt. (AR) appearing on behalf of the Revenue argued that department is asking for interest on amount of Rs. 4,08,177/- where Cenvat credit was utilized for discharging duty liability which could not be done under reverse charge basis and duty was required to be paid in cash.

Reasoning of Judgment:- On perusal of case records it is found that demand of Service Tax for the period 1-1-2005 to 31-3-2007 was paid in cash on 13-9-2007 & 27-9-2007 belatedly. Interest liability for wrongly utilization of Cenvat credit and late payment of duty in cash is attracted and has been correctly upheld by the first appellate authority. The case law relied upon by the appellant are not applicable to the existing factual matrix because appellant in fact utilized Cenvat credit for payment of Service Tax which was not admissible.
In view of the above, the appeal is rejected.

Decision:-The appeal is dismissed.

Comment:-The gist of the case is that the appellant has wrongly utilized accumulated Cenvat credit while discharging Service Tax liability from Cenvat credit on GTA services under Reverse Charge Mechanism. Hence, interest liability for wrongly utilization of Cenvat credit and late payment of duty in cash is attracted and correctly upheld.

Prepared by:- Ritika Mehta

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PJ/Case Law /2016-17/3244

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