2015 (7) TMI 511 - HC - Service Tax

High Court rules for assessee, rejects appeal, no costs. Board circular not binding, service tax decision upheld, GTS as input service.

The Commissioner of Central Excise Versus Maruthamalai Murugan Industries Pvt. Ltd.

The High Court ruled in favor of the assessee, dismissing the appeal and deciding not to award costs in the circumstances. The Court found that the ... Goods Transport Agency - Service Tax on GTA under reverse charge - payment of service tax through cenvat credit - assessee was engaged in manufacture of yarn of different kinds - Whether Circular is binding - Board's circular No.345/4/2005 TRU dated 3.10.2005 - Held that:- similar question has been considered by this Court in the case of Commissioner of Central Excise, Salem - Vs - M/s.Cheran Spinners Ltd. [2013 (8) TMI 215 - MADRAS HIGH COURT] - Credit allowed. - Decided against the revenue. Issues:1. Interpretation of Board's circular and its binding nature on the Department.2. Determination of taxable service in the context of manufacturing excisable products.3. Consideration of Goods Transport Agency Service as an 'input service' under Cenvat Credit Rules.Analysis:1. The appeal before the Madras High Court stemmed from the Tribunal's decision favoring the assessee, which the Revenue challenged. The substantial questions of law admitted for consideration included the Tribunal's failure to consider Circular No.345/4/2005 TRU, which the Revenue argued was binding on the Department.2. The respondent, engaged in yarn manufacturing, paid service tax on Goods Transport Agency (GTA) services through their cenvat credit account. The dispute arose regarding the adjustment of service tax paid on inward transportation of raw materials. The adjudicating authority initially ruled against the assessee, but the Commissioner (Appeals) later reversed the decision in favor of the assessee. The Tribunal upheld the Commissioner's decision, prompting the Revenue's appeal to the High Court.3. During the High Court proceedings, the Revenue's standing counsel acknowledged a prior judgment in Commissioner of Central Excise, Salem vs. M/s. Cheran Spinners Ltd., where a similar issue was decided against the Revenue. The counsel conceded that the present case was covered by the Cheran Spinners case, leading to the conclusion that the appeal should be dismissed. Consequently, the High Court ruled in favor of the assessee, dismissing the appeal and deciding not to award costs in the circumstances.