Cenvat credit can be used to pay service tax on GTA services where the rules permit such utilisation.

Cenvat credit could be utilised to discharge service tax on Goods Transport Agency services where the governing Cenvat Credit Rules permitted payment of service tax on output services from available credit and no legal bar existed. The tribunal applied Rule 3(4)(e) of the Cenvat Credit Rules, 2004 and held that the assessee was entitled to use the credit balance for that purpose. The contrary view taken by the lower authorities was unsustainable.

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Issues: Whether service tax on Goods Transport Agency services received by the assessee could be discharged by utilising available Cenvat credit.

Analysis: The appellate tribunal followed the view that there is no legal bar on using Cenvat credit for payment of service tax on GTA services. It relied on the interpretation that Rule 3(4)(e) of the Cenvat Credit Rules, 2004 permits utilisation of Cenvat credit towards payment of service tax on output services, and that the assessee was entitled to use the credit balance for that purpose.

Conclusion: The assessee was entitled to discharge service tax on GTA services through Cenvat credit, and the contrary view of the lower authorities was unsustainable.

Ratio Decidendi: Cenvat credit may be utilised for payment of service tax on an output service, including GTA services, where the governing rules permit such utilisation and no legal bar exists.

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