Credit of Service Tax on outward freight – landmark order from Tribunal – There is still hope
on 24.4.2007 brought to you details of a Delhi CESTAT order disallowing credit of Service Tax paid on outward freight.
A netizen wrote in
The outward transportation is part of the selling overheads which the manufacturer adds to cost of production . This will give cost of sale and cost of sale + profit = sale price.
Excise duty is on the transaction value and if the manufacturer has paid duty on the transaction value (which includes outward freight also ) how the credit is not justified ?
My friend Santosh Hatwar, hopefully said
Certainly not the end of road
In fact there was no need to split hairs on whether the definition and the clauses therein have to be read disjunctively or not when whatever is stated in the rule is obvious. When this rule is examined harmoniously with the definition of "place of removal" it clearly makes a case for allowing cenvat credit of service tax paid on transportation of goods not only up to the place of removal but also from the place of removal.
An imaginative barrier cannot be imposed on availability or otherwise of credits of service tax paid on transportation for clearances from different places of removal when there is no such intention in the CEA or the CCR.
This judgment is certainly not the end of road on this issue. Lets hope this issue is agitated at the next level for a fair view. Until then swallow the notices from the Revenue on this issue.
Yes, Sir; It’s certainly not the end of the road. The Bangalore Bench has in a recent case, rejected the stay application of the Revenue on this very issue and prima facie, the Tribunal agreed with the submission that such services come within the definition of “Input Services”.
The case is posted for 14th May. Now what can this Bench do, since there is already a decision by another Bench? It has only two choices – agree with the Delhi Bench or refer the matter to a Larger Bench.
An angry netizen told us, “why are you in a hurry to publish such orders?; You are doing free service to Revenue.” Revenue of course will never think so. Anyway we are in the business of bringing you the news as fast as possible – good, bad and indifferent.
See