2007 (7) TMI 32 - AT - Service Tax

Tribunal upholds Commissioner's order in favor of assessee, dismissing revenue's appeal. Decision based on interpretation of legal provisions.

The Tribunal upheld the Commissioner (Appeals)'s order, ruling in favor of the assessee and dismissing the revenue's appeal. The decision was based on the ... Liability to pay Service tax on goods transport agency services - definition of 'output service' under Cenvat Credit Rules, 2004 - provider of taxable service and personal liability to pay Service tax - availability of Cenvat credit on inputs, capital goods and services - registration under Service Tax Rules, 1994 - Notification 32/2004 (ST)Liability to pay Service tax on goods transport agency services - definition of 'output service' under Cenvat Credit Rules, 2004 - provider of taxable service and personal liability to pay Service tax - availability of Cenvat credit on inputs, capital goods and services - Notification 32/2004 (ST) - registration under Service Tax Rules, 1994 - Respondent not liable to pay Service tax in cash under TR-6 for freight on Goods Transport Agency services in respect of inputs/raw material received during 1-1-2005 to 30-9-2005; demand set aside. - HELD THAT: - The Commissioner (Appeals) set aside the original demand after applying Notification 32/2004 (ST), the definitions of 'input service', 'output service' and 'provider of taxable service' under the Cenvat Credit Rules, 2004 and Section 68(2) of the Finance Act, 1994. The respondents were registered under Service Tax Rules, 1994 and paid Service tax on GTA services; such services were held to constitute 'output service' and fell within the definition of 'provider of taxable service', attracting personal liability and allowing Cenvat-credit treatment where applicable. Reliance by the Commissioner (Appeals) on earlier tribunal decisions was noted. The departmental contention that the explanation to the definition of 'output service' required a reference to a Division Bench was rejected: the Tribunal agreed with the appellate authority that the respondents, being a manufacturing unit registered and paying Service tax, were covered by the applicable definitions and notifications, and no error was shown that warranted modification, setting aside, or reference to a Larger Bench. The appeal was therefore without merit. [Paras 2, 3]Impugned order of the Commissioner (Appeals) set aside the demand; appeal dismissed.Final Conclusion: The Tribunal upheld the Commissioner (Appeals) decision setting aside the demand for Service tax on GTA freight for inputs/raw material for the period 1-1-2005 to 30-9-2005, and dismissed the revenue's appeal. Issues: Whether the respondent is liable to pay Service tax in cash under TR-6 challan of freight on road transport service rendered by Goods Transport Agencies in respect of inputs raw material received in their factory during a specific period.Analysis:The Appellate Tribunal, Mumbai, heard both sides regarding the appeal by the revenue against the orders passed by the Commissioner (Appeals) concerning the liability of the respondent to pay Service tax. The impugned order set aside the demand confirmed by the original adjudicating authority. The Commissioner (Appeals) referred to relevant provisions such as Notification 32/2004(ST), Cenvat Credit Rules, 2004, and Sec. 68(2) of Finance Act, 1994. It was noted that the respondents were already paying Service tax on goods transport services, making the services in question 'output service.' The Tribunal decisions in similar cases were cited in favor of the assessee. The assessee, engaged in manufacturing, availed Cenvat credit and was registered under Service tax Rules, 1994 for taxable services by Goods Transport Agency.The ld. JDR contended that the scope and object of the explanation under the definition of 'output service' had not been adequately considered by the decisions relied upon by the respondents. He argued that the matter should be referred to a Division Bench for correct interpretation. However, the Tribunal disagreed with this contention, stating that the respondents fell within the definition of 'provider of taxable service' under Rule 2(r), thus attracting the definition of 'output service.' The impugned order was deemed not erroneous, and the contentions put forth by the ld. JDR were found to lack merit. Consequently, the Tribunal dismissed the appeal filed by the revenue, concluding that no modification or reference to a higher bench was necessary.In summary, the Tribunal upheld the impugned order passed by the Commissioner (Appeals), ruling in favor of the assessee and dismissing the revenue's appeal. The decision was based on the interpretation of relevant legal provisions and previous Tribunal decisions, establishing the liability of the respondent to pay Service tax on the services provided.