2015 (8) TMI 1313 - AT - Service Tax

Tribunal Rules in Favor of Appellant: Cenvat Credit Valid for GTA Service Tax Payment

M/s. Uflex Limited, NOIDA Versus CCE & ST, NOIDA

The Tribunal ruled in favor of the appellant, holding that interest under Section 75 of the Finance Act, 1994 was not justified as the service tax on GTA ... Demand of interest – section 75 of the Finance Act, 1994 – CENVAT credit – GTA services – manufacture of printing ink, adhesive etc. - section 68(2) of the Finance Act 1994 read with rule 2(1)(d)(v) of the Service Tax Rules 1994 – reverse charge mechanism – utilization of CENVAT credit for payment under reverse charge – subsequent to rejection, payment made in cash – Held that: - Rule 3(4)(e) of Cenvat Credit Rules, 2004 the cenvat credit may be utilized for payment of service tax on any output service. Since goods transport agency (GTA) is an output service as per the un-amended provisions of Rules, the cenvat credit utilized by the appellant for payment of GTA service tax is in conformity with the Service Tax Rules, 1994 as held in the case 2010 (5) TMI 608 - PUNJAB AND HARYANA HIGH COURT. The payment of service tax through PLA is not the determining factor in the present case for computation of the period of delay, as because, the payment of service tax has been made within the stipulated time frame by debiting the cenvat account – appeal disposed off – decided in favor of appellant. Issues:- Appeal against demand of interest confirmed under Section 75 of Finance Act, 1994 for payment of service tax on GTA service.- Interpretation of Cenvat Credit Rules, 2004 for utilization of cenvat credit for payment of service tax.- Applicability of unamended provisions of Cenvat Credit Rules, 2004 to the case.- Legal validity of payment of service tax through cenvat account for GTA service.Analysis:1. Demand of Interest under Section 75: The appeal challenged the interest liability confirmed by the Commissioner (Appeals) against the appellant for payment of service tax on GTA service. The appellant initially paid the tax using the cenvat account but later paid in cash as per the Department's insistence. The Department invoked Section 75 of the Finance Act, 1994 for interest due to delayed payment. The Tribunal analyzed the facts and held that since the service tax was paid within the stipulated time frame through the cenvat account, interest under Section 75 was not justified.2. Interpretation of Cenvat Credit Rules: The appellant argued that the unamended provisions of the Cenvat Credit Rules, 2004 allowed for utilizing cenvat credit for payment of service tax on any output service, including GTA service. The Tribunal referred to Rule 3(4) of the Rules and noted that the exclusion of GTA service from output service was introduced only from March 2008. Citing judgments from Punjab & Haryana High Court and Himachal Pradesh High Court, the Tribunal agreed that the appellant was entitled to use cenvat credit for GTA service tax payment.3. Applicability of Unamended Rules: The Tribunal emphasized that since the period in question was before the amendment in March 2008, the unamended provisions applied. This meant that GTA service was considered an output service eligible for cenvat credit utilization. The Tribunal highlighted the relevance of the unamended Rule 2(p) and Rule 3(4) in allowing the appellant to discharge GTA service tax liability through cenvat credit.4. Legal Validity of Payment Method: The Tribunal clarified that the appellant's method of initially using cenvat credit for GTA service tax payment was legally permissible under the unamended Rules. Despite later paying in cash, the Tribunal found that the original payment through the cenvat account within the prescribed time frame absolved the appellant from interest liability under Section 75. The Tribunal set aside the order confirming interest, ruling in favor of the appellant based on the legal provisions and timely payment through the cenvat account.This detailed analysis of the judgment showcases the key issues addressed by the Tribunal regarding the demand of interest, interpretation of Cenvat Credit Rules, applicability of unamended provisions, and the legality of the payment method for service tax on GTA service.