By Puloma Dalal, Jayesh Gogri, Chartered Accountants
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GTA services – payment of service tax through CENVAT Credit – Held, permissible in law.
Facts: The Respondents received GTA services and paid service tax under reverse charge mechanism by utilising 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. They further relied upon the Delhi Tribunal’s divisional bench decision in case of Shree Rajasthan Syntex Ltd. vs. CCE, Jaipur 2011 (24) STR 670 (Tri.-Del.) and Delhi Tribunal’s decision in case of Dhillon Kool Drinks & Beverages Ltd. 2011 (263) ELT 241 (Tri.-Del.) relating to a similar case.
Held:
Relying on the divisional bench decision in the case of Shree Rajasthan Syntex Ltd. (Supra), 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 providers in view of Rule 2(r) of the CENVAT Credit Rules, 2004 and therefore, were covered under Rule 2(p) of the CENVAT Credit Rules, 2004 and, thus, the Respondents were eligible to utilise CENVAT credit to pay off service tax liability.
