Appellants can use Cenvat credit for GTA services, Tribunal rules on service tax liability. No penalty or interest justified.

The Tribunal held that the appellants were eligible to discharge their service tax liability on GTA services by using Cenvat credit, based on the interpretation of Rule 2(p) of the Cenvat Credit Rules, 2004. The Tribunal emphasized that the Cenvat credit was deemed to be output service during the relevant period, as per the Explanation to Rule 2(p). Consequently, the imposition of penalty and charging of interest were found unjustifiable. The impugned order was set aside, and the appeal was allowed, with the stay petition also being disposed of accordingly.

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Issues:
1. Interpretation of Rule 2(p) of the Cenvat Credit Rules, 2004 regarding the eligibility of service tax paid for GTA service.
2. Utilization of Cenvat credit for paying service tax on GTA service.
3. Imposition of penalty and charging of interest for payment through Cenvat credit.

Analysis:
1. The appeal involved the interpretation of Rule 2(p) of the Cenvat Credit Rules, 2004, specifically focusing on the eligibility of service tax paid for GTA service. The appellant argued that prior to 18-4-06, the Explanation to Rule 2(p) allowed the service tax paid on GTA service to be utilized for paying service tax on the same service, considering it as output service. The appellant relied on precedents like the case of M/s. Bhushan Power & Steel Ltd. v. Commissioner of Central Excise, Customs & Service Tax, BBSR-II and the case of M/s. Mahindra Ugine Steel Co. Ltd. v. Commissioner of Central Excise, Raigad to support their argument.

2. The Department, represented by the ld. SDR, contended that the credit on input service could not be used for paying duty on GTA service, as it was considered an input service. However, acknowledging the existence of the Explanation to Rule 2(p) during the relevant period, the Department agreed that the extended meaning of 'output service' provided by the Explanation needed to be considered.

3. The Tribunal, after hearing both sides and considering the precedent set by the case of M/s. Bhushan Power & Steel Ltd., followed by the Mumbai Bench in the case of M/s. Mahindra Ugine Steel Co. Ltd., concluded that the appellants were indeed eligible to discharge their service tax liability on GTA services by using Cenvat credit. The Tribunal emphasized that at the material time, the Cenvat credit was deemed to be output service as per the Explanation to Rule 2(p). Consequently, the Tribunal found the imposition of penalty and charging of interest unjustifiable. Therefore, the impugned order was set aside, and the appeal was allowed, with the stay petition also being disposed of accordingly.

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