Tribunal rules in favor of appellant on service tax liability & Cenvat credit

The Tribunal ruled in favor of the appellant, holding that the appellant was not liable to pay service tax as a manufacturer and was entitled to Cenvat credit for service tax paid by the service provider - GTA. The Tribunal emphasized the obligation of the service provider to pay service tax and that the appellant had correctly taken Cenvat credit in compliance with the law. Precedent rulings supported the appellant's position, stating that once service tax is paid by the service provider, it cannot be demanded again from the recipient of the service. The Tribunal set aside the previous order, allowing the appeal and granting consequential benefits to the appellant.

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Issues:
1. Liability of a manufacturer to pay service tax as a recipient of service and entitlement to Cenvat credit.
2. Interpretation of Rule 2(1)(d)(v) of service tax rules and Rule 9 of Cenvat Credit Rules.
3. Precedent rulings on the liability of the manufacturer to pay service tax.
4. Application of Circular 97/8/2007 - ST regarding payment of service tax by consignee, consignor, or GTA.

Analysis:
1. The appellant challenged an order holding them liable to pay service tax as a manufacturer and rejecting their entitlement to Cenvat credit for service tax paid by the service provider - GTA. The issue revolved around the interpretation of Rule 2(1)(d)(v) of service tax rules and Rule 9(1)(e) of Cenvat credit rules, 2004, which govern the eligibility for Cenvat credit based on the payment of service tax by the person liable.

2. The Tribunal considered the provisions of Section 68 of the Act, emphasizing the obligation of the person providing taxable service to pay service tax. It was noted that prior to 1/7/2012, the tax had already been deposited by the GTA, as clarified by Circular 97/8/2007 - ST. The Tribunal held that Rule 2(1)(d)(v) of service tax rules does not override the Act and that the appellant had correctly taken Cenvat credit in compliance with the law, as the invoice is a prescribed document under Rule 9(1)(f) of Cenvat credit rules 2004.

3. The appellant relied on precedent rulings such as Navyug Alloys (P) Ltd. Vs. CCE 2008 and Umasons Auto Compo Private Ltd Vs. Commissioner of Central Excise & Customs, where it was established that once service tax is paid by the service provider, it cannot be demanded again from the recipient of the service. The Tribunal upheld these precedents, emphasizing the prima facie liability of the service provider to pay service tax and the eligibility of the recipient to take Cenvat credit if the tax has been paid.

4. The Tribunal considered the arguments of the revenue, emphasizing the requirements under Rule 9 of the Cenvat Credit Rules regarding the possession of Challan and bills for availing Cenvat credit. However, based on the interpretation of relevant provisions and precedents, the Tribunal set aside the impugned order, allowing the appeal and granting the appellant consequential benefits in accordance with the law.

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