Tribunal allows credit for service tax on transportation of motor cycles for authorized service station

The Tribunal ruled in favor of the Respondents, holding that they are eligible to avail credit of service tax paid on transportation of motor cycles as input service for payment of service tax on services provided as an authorized service station. The Tribunal found that the transportation of vehicles to the show room is related to the servicing of vehicles, allowing the Respondents to claim the credit under the Cenvat Credit Rules, 2004.

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Issues:
Whether the Respondents are eligible for availing credit of service tax paid on transportation of motor cycles as input service for payment of service tax on services provided as an authorized service station.

Analysis:
The appeal was filed by the Revenue against the Order-in-Appeal passed by the Commissioner of Central Excise and Customs. The issue revolved around whether the Respondents, who are authorized dealers of motor cycles providing servicing, are entitled to credit of service tax paid on transportation of motor cycles as input service for payment of service tax on services provided as an authorized service station. The Original authority denied the credit stating that input service is applicable only if the input and output services are of the same category. The Commissioner (Appeals) held that the Respondents are eligible for the credit, leading to the Revenue's appeal. The Revenue contended that the inward transportation of new vehicles is not related to the output service of servicing old/used vehicles at the service station. They argued that the input service of transportation of new vehicles ends with the sale and does not relate to the servicing activity.

The Respondents argued that they pay service tax on GTA services for transportation to their show room and provide output service by servicing vehicles. They claimed that unless vehicles are received and sold, there would be no servicing. The Tribunal carefully examined the case records and found that the Respondents pay service tax on transportation services and provide output service by servicing vehicles. The definition of input service was considered broad enough to cover the input service availed by the Respondents and the output service rendered by them. The Tribunal rejected the Revenue's appeal, upholding the Commissioner (Appeals) decision that the Respondents are rightfully entitled to the credit.

In conclusion, the Tribunal ruled in favor of the Respondents, stating that they are eligible for availing credit of service tax paid on transportation of motor cycles as input service for payment of service tax on services provided as an authorized service station. The Tribunal found that the input service of transportation of vehicles to the show room is related to the output service of servicing vehicles, and therefore, the Respondents are entitled to the credit as per the Cenvat Credit Rules, 2004.

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