By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
fiogf49gjkf0d
Whether the CENVAT Credit can be utilised for payment of Service tax on GTA service under reverse charge for the period post 19-04-2006? Held, Yes
Facts:
The Assessee received goods transport agency’s (GTA) service and paid Service tax thereon under reverse charge utilising the CENVAT credit during the period April 2006-September 2006.
The Revenue’s contention was that since the GTA service were not output service, they are not entitled to use the CENVAT credit for payment of Service tax on such services. The Revenue further contended that since the issue was from April, 2006 to September, 2006 and the legal fiction given to the said service to treat as output service, as defined in Rule 2(p) of the CENVAT Credit Rules, 2004 (CCR) was withdrawn with effect from 19-04-2006 inasmuch as Explanation thereto was deleted, the ratio of Nahar Industrial Enterprises Ltd. [2012] 35 STT 391 (Punj. & Har) (which was in the context of pre-amended period) is not applicable to this case. The Revenue also relied upon the decision of Single Member Decision in the case of Uni Deritend Ltd. vs. CC&CE [2012] 34 STT 356/17 taxmann.com 102 (Mum) rendered in the context of post amendment period in support of its contention.
The Assessee contended that, the fact of withdrawal/ deletion of explanation to Rule 2(p) of CCR did not have much effect inasmuch as no amendment was made in the provisions of Rule 2(r) “provider of taxable service” of CCR which included a person liable to pay Service tax. Assessee submitted that, since the assessee was liable to pay Service tax in respect of GTA service received by him, he is a provider of taxable service and consequently he is covered by the definition of output service. He also relied upon the decision of Division Bench in the case of Shree Rajasthan Syntex Ltd. 2011 (24) STR 670 (Tri-Del).
Held:
Accepting the assessee’s contention and approving the decision in the case of Shree Rajasthan Syntex (supra), it was held that the assessee being recipient of services from the GTA was liable to pay the Service tax and as such, he is provider of taxable Service in terms of Rule 2(r) and consequently gets covered by output service definition as appearing in Rule 2(p) of the Rules. It further held that deletion of explanation with effect from 18-04-2006 from Rule 2(p) of the CCR would not make much difference.
