GTA services - payment of service tax through CENVAT Credit

CCE, Indore vs. Spendex Industries Ltd - 2013 (31) STR 472 (Tri-Del.)

Facts:

The Respondents received GTA services and paid service tax under reverse charge mechanism by utilizing CENVAT credit which the department disallowed.

The revenue contended that since the services were not output services, the Respondents were not entitled to use CENVAT credit for payment of tax.

The Respondents contended that inasmuch as they were liable to pay tax in respect of GTA services received by them, they were required to be treated as provider of taxable services in terms of the relevant rules.

Held:

Relying on the divisional bench decision in the case of Shree Rajasthan Syntex Ltd, It was held that the recipient of services from GTA i.e. the Respondents were liable to pay service tax and were deemed to be service provider in view of Rule 2(r) Of the CENVAT credit Rules, 2004 and therefore, were covered under Rule 2(p) of the CENVAT Rule, 2004 and, thus, the Respondents were eligible to utilise CENVAT credit to payoff service tax liability.