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of <h1>Manufacturers can claim tax credit on Goods Transport Agency's service for service tax: Tribunal decision</h1> The Tribunal ruled in favor of the cement manufacturers, allowing them to utilize the tax credit on Goods Transport Agency's Service for paying service ... Cenvat credit of service tax – department contended that appellant is not providing any output service and had only received services and therefore not entitle for input service tax credit in relation to GTA Service – Held that contention was wrong and appeal is allowed Issues:Interpretation of 'output service' under Cenvat Credit Rules, 2004.Analysis:The case involved a dispute regarding the utilization of service tax credit by cement manufacturers for Goods Transport Agency's Service (GTA Service). The manufacturers availed GTA Service for receiving inputs into their factory and for sending out the final product, paying tax on both instances. The department objected to the manufacturers utilizing the credit of service tax paid on GTA Service for the removal of the final product, arguing that they had not provided any 'output service.' A show-cause notice was issued, leading to a demand for service tax and a penalty imposed by the Commissioner under the Finance Act, 1994.Upon examination of the Cenvat Credit Rules, 2004, the Tribunal referred to an Explanation to the definition of 'output service' under Rule 2(p). The Explanation clarified that if a person liable for paying service tax does not provide any taxable service or manufacture final products, the service for which they are liable to pay service tax shall be deemed to be the output service. In this case, the manufacturers did not provide any taxable service but did manufacture an excisable product. The GTA Service received by them for the clearance of their product was deemed to be 'output service' due to the Explanation. Therefore, the manufacturers were entitled to utilize the tax credit on the input GTA service for paying service tax on the removal of the final product.The Tribunal concluded that the learned Commissioner had overlooked the Explanation to the definition of 'output service' and set aside the demand for service tax and the penalty imposed. The appeal was allowed, emphasizing that the manufacturers were within their rights to utilize the tax credit for the service tax on the removal of the final product from the factory as it constituted an 'output service.'
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