Can Service Tax on GTA be paid from CENVAT Account?
THIS is not a major issue but has been agitated in all the Benches of the CESTAT and some High Courts. The Punjab & Haryana High Court had disposed of more than twenty cases on the subject. Recently we carried an order of the Chennai Bench of the Tribunal (2011-TIOL-767-CESTAT-MAD), in which the Tribunal disposed of 50 appeals in a bunch holding that before the amendment to Rule 2(p) of the CENVAT Credit Rules 2004, on 19.4.2006, the assessees can avail CENVAT Credit for payment of service tax on Goods Transport Agency service, but from 19.4.2006 onwards, the payment is not allowed from CENVAT account.
Tribunal had in CCE, Belgaum v. M/s. Shri Tubes & Steels Pvt. Ltd. reported in had observed,
Similar view was taken earlier in CCE, Chandigarh v. Nahar Industrial Enterprises Ltd. reported in - which was followed in RRD Tex Pvt. Ltd. v. CCE, Salem reported in - , Pallipalayam Spinners Pvt. Ltd. v. CCE, Salem reported in - and Bhushan Power and Steel Ltd. CCE, C&ST reported in - 2007-TIOL-1828-CESTAT-KOL. The last decision was also followed in Mahindra Ugine Steel Co. Ltd. v. CCE, Raigad reported in - . Undisputedly, all these cases related to the period prior to 19-4-2006. In other words, as far as the issue in question is concerned to the extent it related to the period prior to 19-4-2006, the consistent view taken by the Tribunal is that in view of the explanation clause, the assessee would be entitled to avail the benefit of such service tax in order to claim the Cenvat Credit thereof. In view of the detailed reasoning given in Nahar Exports Ltd. case - in relation to the explanation clause, in the absence of any other material which could justify a different view in the matter, we do not find any justifiable reason to take a different view.
Recently the P&H High Court in Commissioner of Central Excise v Nahar Spinning Mills Ltd - followed its own order in CCE v. M/s Nahar Industrial Enterprises Ltd - (this decision was not widely reported and will now be.) on the question "Whether a person who is not actual service provider, but discharges the Service tax liability on the Taxable Services, under Section 68(2) of the Finance Act, 1994, as a deemed service provider, is entitled to avail the Cenvat Credit on inputs/inputs services/Capital Goods for payment of GTA Services tax, even if he is not using such inputs/input services/capital goods for providing taxable services?", which was decided in favour of the assesse.
However the Tribunal in CCE, GHAZIABAD vs BPL DISPLAY DEVICES LTD - had held that the GTA services received by the respondent cannot be treated as their "output service" and since in terms of the provisions of Rule 3(4) of Cenvat Credit Rules, the Cenvat Credit could be utilised only for payment of service tax on output services or payment of excise duty on final products, the respondents have wrongly paid the service tax on the GTA services received by them through Cenvat credit.
The GTA demon refuses to leave Service Tax assessees.