2008 (2) TMI 248 - AT - Service Tax

Goods Transport Agency qualifies for Service Tax credit exemption

The Tribunal held that the applicant was eligible for exemption under Notification No. 32/2004-S.T. for utilizing Service Tax credit on input services ... Appellant claiming the benefit of Notification 32/2004, which provided for payment of Tax on a value equivalent to 25% of the gross amount charged from the customer by such “Goods Transport Agency” - exemption, prima facie, is applicable irrespective of the fact, whether the tax is paid by the “GTA” themselves or by the supplier of raw material or recipient of the raw material - duty payable, after taking into consideration the exemption Notification, has been paid – hence stay is granted Issues:Utilization of Service Tax credit for input services towards output services.Eligibility for exemption under Notification No. 32/2004-S.T. for 'Goods Transport Agency' services.Prima facie view on the exemption granted under Notification No. 32/2004-S.T.Analysis:The case involved a manufacturer of excisable goods paying Service Tax on services by a 'Goods Transport Agency' as input services and utilizing the credit for subsequent Service Tax payments. The Department objected, stating the credit should only be used for output services, not input services. The applicant sought exemption under Notification No. 32/2004-S.T., which allowed Service Tax payment on a value equivalent to 25% of the gross amount charged by the 'Goods Transport Agency.' The Department argued the applicant was not eligible for the exemption as they were not the provider of the taxable service.Upon hearing both sides, the Tribunal noted that the exemption under Notification No. 32/2004-S.T. applied to services provided by a 'Goods Transport Agency,' regardless of who paid the Service Tax. The exemption was deemed applicable irrespective of whether the tax was paid by the agency, the supplier of raw material, or the recipient of the raw material. The Tribunal observed that the duty payable, considering the exemption, had been paid. Consequently, the Tribunal held that the applicant had established a strong case for waiving the balance duty and penalty, granting the stay petition unconditionally. The appeal was scheduled for a future hearing.