Cenvat credit and GTA service tax: abatement and credit utilisation upheld for tax payment under settled Tribunal view.

For goods transport agency services, the entitlement to abatement under Notification No. 32/2004-ST was upheld because the Tribunal treated the point as settled by earlier decisions, and payment of tax only on the balance after abatement was accepted. The Tribunal also held that service tax on such transportation services could be discharged through accumulated Cenvat credit under Rule 3(4), because the deeming fiction in Rule 2(p) treats the tax-liable service as output service where the person does not provide taxable services or manufacture final products. The revenue challenge therefore failed on both issues.

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Issues: (i) Whether the respondent was entitled to claim abatement under Notification No. 32/2004-ST while discharging service tax on goods transport agency services. (ii) Whether service tax payable on such transportation services could be discharged by utilising accumulated Cenvat credit under Rule 3(4) of the Cenvat Credit Rules, 2004.

Issue (i): Whether the respondent was entitled to claim abatement under Notification No. 32/2004-ST while discharging service tax on goods transport agency services.

Analysis: The entitlement to abatement on freight paid for goods transport agency services was treated as already covered by earlier Tribunal decisions on the same issue, and the matter was regarded as no longer res integra. The respondent's method of paying service tax only on the balance portion after availing the prescribed abatement was accepted in the light of that settled view.

Conclusion: The issue was decided in favour of the respondent.

Issue (ii): Whether service tax payable on such transportation services could be discharged by utilising accumulated Cenvat credit under Rule 3(4) of the Cenvat Credit Rules, 2004.

Analysis: The decisive consideration was the deeming fiction in Rule 2(p) of the Cenvat Credit Rules, 2004, under which the service for which a person liable to pay service tax is responsible may be treated as output service where that person does not provide any taxable service or manufacture final products. On that basis, the service tax payable on goods transport agency services was held to be capable of discharge through Cenvat credit under Rule 3(4), and the contrary objection was rejected.

Conclusion: The issue was decided in favour of the respondent.

Final Conclusion: The revenue's challenge failed because both the abatement treatment for goods transport agency services and the utilisation of Cenvat credit for payment of service tax were upheld.

Ratio Decidendi: Where the statutory deeming fiction treats the service for which tax is payable as output service, service tax on goods transport agency services may be discharged by utilising Cenvat credit under the applicable credit rules.

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