2008 (4) TMI 190 - AT - Service Tax

Waiver of predeposit and stay of recovery granted in Cenvat credit case appeal

The Tribunal granted a waiver of predeposit and a stay of recovery of dues until the final disposal of the appeal in the case involving the utilization of ... Cenvat credit - utilisation of Cenvat credit for payment of service tax - output service - deemed provider of taxable service - waiver of pre-deposit and stay of recoveryCenvat credit - output service - deemed provider of taxable service - Whether the GTA service availed for receipt of inputs into the factory by the appellant constituted an output service permitting utilisation of Cenvat credit for discharge of service tax liability - HELD THAT: - The Tribunal recorded competing contentions: the appellant relied on the definitions in the Cenvat Credit Rules and on earlier Tribunal decisions holding that GTA services for receipt of inputs were output services, while the Department relied on the explanation to Rule 2(p) of CCR to contend that where the recipient is a manufacturer of final products the GTA service cannot be deemed an output service. The Bench found the legal question to be contentious and requiring fuller hearing on merits and therefore did not finally decide the correctness of utilising Cenvat credit for the said GTA service. [Paras 4]Remanded for full consideration on merits; no final adjudication on whether the GTA service was an output service permitting Cenvat utilisationWaiver of pre-deposit and stay of recovery - utilisation of Cenvat credit for payment of service tax - Whether pre-deposit should be waived and recovery stayed pending final disposal of the appeal - HELD THAT: - Noting that the substantive issue was contested and in view of prior Tribunal decisions favouring the appellant, the Bench exercised its discretion to grant interim relief. The Tribunal ordered complete waiver of pre-deposit and stayed recovery of the disputed demand, interest and penalties as directed in the impugned order until the appeal is finally disposed of. [Paras 4]Complete waiver of pre-deposit granted and recovery stayed till final disposal of the appealFinal Conclusion: The Tribunal did not decide the substantive question whether the GTA service in issue qualified as an output service for Cenvat utilisation; that question is remanded for full hearing. Meanwhile, the Tribunal granted complete waiver of pre-deposit and stayed recovery of the dues as per the impugned order until the appeal is finally disposed of. Issues:Utilization of Cenvat credit for GTA service liability.Analysis:The case involved the utilization of Cenvat credit by M/s. Southern Agrifurane Industries Ltd. for discharging liability towards GTA service received for bringing in raw materials to their factory. The department objected to this utilization and demanded the credit under Section 73 of the Finance Act, 1994, along with interest and penalties under Section 76 of the Finance Act, 1994 and Rule 15(3) of Cenvat Credit Rules, 2004 (CCR).The appellant argued that as per the relevant provisions of CCR and Service Tax Rules 1994, the GTA service received should be considered as output service, allowing the utilization of Cenvat credit for payment. They cited case laws to support their claim, where the Tribunal had held that GTA service availed for receipt of inputs into the factory constituted output service.On the other hand, the respondent contended that the appellant, being a manufacturer of final products, the GTA service availed for receiving inputs cannot be deemed as output service as per the explanation under Rule 2(p) of CCR. The respondent argued that the impugned order was passed in accordance with the law.After considering the arguments from both sides, the Tribunal found the issue to be contentious and needing further deliberation. However, considering the decisions of the Tribunal in favor of the appellant in similar cases, the Tribunal ordered a complete waiver of predeposit and a stay of recovery of dues until the final disposal of the appeal.