Service Tax Payable under Transport of Goods on Road or goods Transport Agency service [GTA]
can be paid out of CENVAT.
Above service is covered under reverse
charge mechanism and provided in Notification No. 30/2012 Service Tax
dated 20.06.2012 in exercise of the powers conferred by sub-section (2) of
section 68 of the Finance Act, 1994 (32 of 1994), and in supersession of (i) notification of
the Government of India in the Ministry of Finance (Department of
Revenue), No. 15/2012- Service Tax, dated the 17th March,
2012.
Means that if service is covered under reverse
charge i.e. u/S. 68(2), service tax shall be paid in cash and after
the payment of Service Tax in cash, CENVAT can be claimed.
But in recent two judgments of CESTAT, whole
understanding of law and Sec. 68(2) has been reversed and allow the Service tax
payable in case GTA service by recipient out of CENVAT.
1.
CCE
Indore Vs. Deepak Spinners Ltd. [ CESAT New Delhi]
2.
CCE
Indore Vs. Uflex Ltd [ CESAT New Delhi]
Both the cases decided in favour of assesse on the
basis of below mentioned High Court cases.
Revenue has filed this appeal against order on the
ground that the Commissioner (Appeals) had allowed payment of service tax on
the GTA service from cenvat credit which is not permitted as GTA service was
not appellants output service and service tax was payable by the
appellant under reverse charge mechanism, while cenvat credit can be utilised
for paying service tax on output service. In this regard, we notice that in the
appellants own case reported as CCE, Chandigarh vs. Deepak Spinners
Ltd. – 2013 (32) STR 531 (H.P.), High Court of Himachal Pradesh held that
cenvat credit can be utilised for payment of service tax on GTA service. In the
case of Commissioner vs. Nahar Industrial Enterprises Ltd. 2012 (25)
STR 129 (P&H), Punjab & Haryana High Court has also held that cenvat
credit can be utilised for payment of service tax on GTA service under reverse
charge mechanism. Similar view has been taken by the Delhi High Court in the
case of CST vs. Hero Honda Motors Ltd. 2013 (29) STR 358 (Del.).
Thus, the issue involved in this case is no longer res integra and has been
settled in favour of assessee.
Basis of decision in favour of assessee in case of
Nahar Industrial Enterprises Ltd is as follow:
“Whether a person who is not an actual service
provider, but discharges the service tax liability on the Taxable
Services, under Section 68(2) of Finance Act, 1994, as a deemed service
provider, is entitled to avail the CENVAT credit on inputs/input services/capital
goods for payment of GTA service tax, even if he is not using such inputs/input
services/capital goods for providing taxable services by virtue of deeming
legal fiction?”
Learned counsel for the revenue has contended that
the respondents cannot pay the service tax from the Cenvat credit availed by
them. But this argument has no force, because a perusal of para 2.4.2 of CBEC’s
Excise Manual of Supplementary Instructions shows that there is no legal bar to
the utilisation of Cenvat credit for the purpose of payment of service tax on
the GTA service.
Apart from the above, even as per Rule 3(4)(e) of
the Cenvat Credit Rules, 2004, the Cenvat credit may be utilized for payment of
service tax on any output service
In the present case also, the service tax was paid
out of the Cenvat credit on GTA services and, hence, the respondents were well
within their right to utilize the Cenvat credit for the purpose of payment of
service tax. The Commissioner (Appeals) as well as the Tribunal have rightly
held that the respondents were entitled to pay the service tax from the Cenvat
credit.
Now after the above said judgement, big question
arises that the other services stipulated in Notification No. 30/2012 can be
paid out of CENVAT or not.