2008 (9) TMI 305 - AT - Service Tax

Tribunal grants waiver for service tax liability on goods transport agency; applicant eligible for credit.

The Tribunal granted waiver of pre-deposit of duty and penalty for the discharge of service tax liability on goods transport agency through Cenvat Credit ... Cenvat Credit utilisation for payment of service tax - Service tax liability of goods transport agency under Section 68(2) of the Finance Act, 1994 - Omission of explanation to Rule 2(p) of the Cenvat Credit Rules, 2004 by Notification dated 19-4-2006 - Amendment of Rule 2 of the Cenvat Credit Rules, 2004 by Notification dated 1-3-2008 imposing exclusion of GTA serviceCenvat Credit utilisation for payment of service tax - Omission of explanation to Rule 2(p) of the Cenvat Credit Rules, 2004 by Notification dated 19-4-2006 - Amendment of Rule 2 of the Cenvat Credit Rules, 2004 by Notification dated 1-3-2008 imposing exclusion of GTA service - Whether the assessee could prima facie discharge service tax liability on goods transport agency (GTA) services by utilising Cenvat credit and whether pre-deposit of duty and penalty should be waived pending appeal. - HELD THAT: - The Commissioner (Appeals) had allowed availment of credit prior to 19-4-2006 following this Tribunal's decision in Nahar Industrial Enterprises Ltd., while the explanation to Rule 2(p) of the Cenvat Credit Rules, 2004 was omitted by Notification No. 8/2006-C.E. (N.T.) dated 19-4-2006, which was treated as rendering the assessee ineligible to avail credit after that date. Subsequently Notification No. 10/2008-C.E. (N.T.) dated 1-3-2008 amended Rule 2 to substitute language so as to exclude the taxable service referred to in sub-clause (zzp) (thereby excluding GTA service). In view of these developments the Tribunal found that the restriction on utilisation of Cenvat credit for GTA services effectively arises only by the amendment of 1-3-2008, and that on the material placed the applicant had a prima facie case for relief. Applying this reasoning, the Tribunal exercised its power to waive the requirement of pre-deposit of the disputed duty and equal penalty until disposal of the appeal.Pre-deposit of the duty and penalty waived until disposal of the appeal; prima facie entitlement to rely on Cenvat credit for GTA service payment upheld for the period prior to the effective restriction imposed by the 1-3-2008 amendment.Final Conclusion: The Tribunal allowed the stay application and waived the pre-deposit of the disputed duty and equal penalty pending disposal of the appeal, on the view that the assessee had a prima facie case to utilise Cenvat credit to discharge GTA service tax liability until the restriction introduced by the 1-3-2008 amendment. Issues involved:1. Discharge of liability of service tax on goods transport agency under Section 68(2) of the Finance Act, 1994 through Cenvat Credit account.Analysis:The applicant sought waiver of pre-deposit of duty and penalty related to the discharge of service tax liability on goods transport agency under Section 68(2) of the Finance Act, 1994 through Cenvat Credit account. The Commissioner (Appeals) had allowed credit before 19-4-2006 based on a Tribunal decision in a previous case. However, it was noted that an explanation to Rule 2(p) of the Cenvat Credit Rules, 2004 was omitted by Notification No. 8/2006-C.E. (N.T.) on 19-4-2006, rendering the applicant ineligible for credit post that date.The Tribunal, in a previous case, had held that there was no restriction on utilizing credit by a manufacturing unit for payment of service tax as a service tax provider. The advocate pointed out that Notification No. 10/2008-C.E. (N.T.) dated 1-3-2008 had amended Rule 2 of the Cenvat Credit Rules, 2004, introducing restrictions on utilizing credit specifically excluding certain taxable services. This implied that the restriction for utilizing Cenvat credit towards goods transport agency services would be imposed by the 2008 notification.Considering the above amendment and the argument presented by the applicant, it was concluded that a prima facie case existed for the waiver of pre-deposit of duty and penalty. Consequently, the pre-deposit of duty and penalty were waived until the appeal's disposal, and the stay petition was allowed. The operative part of the order was pronounced in the open court.