Place of removal controls credit on outward freight in FOR sales; buyer's premises may qualify for GTA credit.

Eligibility for credit of service tax paid on outward freight/GTA service depends on a correct determination of the place of removal. In FOR sales, the buyer's premises may qualify as the place of removal where the sale is completed there and freight forms part of the assessable value. The Board's 08.06.2018 circular was noted as supporting that approach. As the authorities below had not examined this foundational issue, the credit entitlement could not be finally decided. The matter was therefore remanded for fresh consideration after first determining the place of removal and then applying the correct test for eligibility of credit on GTA service.

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Issues: Whether credit of service tax paid on outward freight / GTA service was admissible where the sales were stated to be on FOR basis and the place of removal had to be determined before deciding the credit entitlement.

Analysis: Credit on freight beyond the place of removal depends on identifying the correct place of removal. The governing principles recognised that, in FOR sales, the buyer's premises may constitute the place of removal if the sale is completed there and the freight forms part of the assessable value. The Board's circular dated 08.06.2018 also clarified that in FOR transactions the place of removal would be the buyer's premises. Since the authorities below had not examined that foundational question, the entitlement to credit could not be finally decided without such determination.

Conclusion: The matter was remanded to the appellate authority to first determine the place of removal and then decide the eligibility of credit on GTA service; the assessee obtained a remand for reconsideration.

Final Conclusion: The impugned order was set aside and the dispute over freight-related credit was sent back for fresh decision after applying the correct test for place of removal.

Ratio Decidendi: Eligibility of credit on outward freight depends on the legally correct determination of the place of removal, and in FOR sales the buyer's premises may qualify as that place for examining credit entitlement.

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