GTA services received amounts to output services- service tax payable under reverse charge could be paid by utilising CENVAT credit balance.

Commissioner of central Excise & Customs vs. Panchmahal Steel Ltd. [2015] 54 taxmann.com 151 (Gujarat ) –

 CENVAT Credit : Rule 3(4(e) provides that CENVAT Credit may be utilised for payment of service tax on any output service –GTA services received amounts to output services- service tax payable under reverse charge could be paid by utilising CENVAT credit balance.

FACTS:

The assessee was engaged in the business of manufacturing excisable goods. It was also liable to pay service tax for the goods  transport agency service. It utilised CENVAT credit pertaining to manufacturing activities for the payment of service tax of GTA service. The revenue’s stand was that such CENVAT credit could not have been utilised for service tax payable on GTA service and such tax ought to have been paid in cash.

HELD :

The Hon’ble  High court observed that Rule 3 of the  CENVAT Credit Rules, 2004 Pertains to CENVAT Credit sub rule (1) thereof allows the manufacturer or purchaser of final product or provider of output service to take credit of CENVAT of various duties specified therein.

Sub-rule (4) of Rule 3 of the said rules provides that the CENVAT credit may be utilised for the payment of various duties specified in clauses (a) to (e) thereof ; Clause (e) pertains to “service tax on any output service.” This would also include the GTA service. Hence, by combined reading of these statutory provisions the high court held that the CENVAT Credit is admissible for the purpose of paying such duty. It concurred with decisions of Punjab and Haryana High Court in the case of Nahar Industrial  Enterprises Ltd. [2012] 35 STT 391 (Punj & Har) &Delhi High court in the case of CST vs Hero Honda Motors Ltd. [2012] 38 STT 72 ( Delhi).

Note:  Readers may note that from 01-03-2008. the definitions of output service  was amended to exclude GTA service specifically and from 01-07-2012, the definition exclude a service where the whole of service  tax is liable to be paid by the recipient of service. Further explanation is inserted in Rule 3(4) providing that CENVAT Credit cannot be used for the payment of service tax in respect of services where the person liable to pay tax is the service recipient.Commissioner of central Excise & Customs vs. Panchmahal Steel Ltd. [2015] 54 taxmann.com 151 (Gujarat ) –

 CENVAT Credit : Rule 3(4(e) provides that CENVAT Credit may be utilised for payment of service tax on any output service –GTA services received amounts to output services- service tax payable under reverse charge could be paid by utilising CENVAT credit balance.

FACTS:

The assessee was engaged in the business of manufacturing excisable goods. It was also liable to pay service tax for the goods  transport agency service. It utilised CENVAT credit pertaining to manufacturing activities for the payment of service tax of GTA service. The revenue’s stand was that such CENVAT credit could not have been utilised for service tax payable on GTA service and such tax ought to have been paid in cash.

HELD :

The Hon’ble  High court observed that Rule 3 of the  CENVAT Credit Rules, 2004 Pertains to CENVAT Credit sub rule (1) thereof allows the manufacturer or purchaser of final product or provider of output service to take credit of CENVAT of various duties specified therein.

Sub-rule (4) of Rule 3 of the said rules provides that the CENVAT credit may be utilised for the payment of various duties specified in clauses (a) to (e) thereof ; Clause (e) pertains to “service tax on any output service.” This would also include the GTA service. Hence, by combined reading of these statutory provisions the high court held that the CENVAT Credit is admissible for the purpose of paying such duty. It concurred with decisions of Punjab and Haryana High Court in the case of Nahar Industrial  Enterprises Ltd. [2012] 35 STT 391 (Punj & Har) &Delhi High court in the case of CST vs Hero Honda Motors Ltd. [2012] 38 STT 72 ( Delhi).

Note:  Readers may note that from 01-03-2008. the definitions of output service  was amended to exclude GTA service specifically and from 01-07-2012, the definition exclude a service where the whole of service  tax is liable to be paid by the recipient of service. Further explanation is inserted in Rule 3(4) providing that CENVAT Credit cannot be used for the payment of service tax in respect of services where the person liable to pay tax is the service recipient.