By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
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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 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 products 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 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).
