Appellant denied input tax credit for transport services since transportation charges were not included in assessable value

HC dismissed the appeal, holding the appellant not entitled to input tax credit for goods-transport services used to carry products to the buyer where the appellant did not include those transportation costs in the assessable value for central excise. The court distinguished prior SC authority and found that, because the transportation cost was not added to the assessable value, the appellant cannot claim credit for those input services. The Tribunal's order was upheld and the appeal was dismissed.

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Issues:
- Whether the appellant is entitled to avail input tax credit of the tax paid in relation to services availed from goods transport agencies for transporting products to the buyer's premises under a contract entered on Freight on Road [FOR] basis.

Analysis:
The judgment by the High Court of Kerala involved considering the entitlement of the appellant to claim input tax credit for tax paid on transportation services from goods transport agencies. The appellant, engaged in the manufacture and sale of electrical transformers, had contracts with customers for supply, installation, and commissioning of transformers on FOR basis, where the obligation of transportation was on the appellant. The appellant argued that since the sale was concluded at the buyer's premises, they should be allowed to treat the services from transport agencies as input services for claiming CENVAT credit. However, the authorities relied on a Supreme Court decision to reject the claim, stating that CENVAT credit on GTA services is only available up to the place of removal, which was deemed to be the appellant's factory, not the buyer's premises.

The appellant contended that a Supreme Court decision supported their claim, where the place of removal for Central Excise duty was considered the buyer's premises in a similar FOR basis contract scenario. However, the court noted that in the instant cases, the transportation costs were not included in the assessable value of goods for Central Excise duty payment. As a result, the court found it untenable for the appellant to claim input tax credit for transportation services when the costs were not factored into the duty payment. The court emphasized that allowing such a claim would go against the purpose of the CENVAT credit scheme, which aims to prevent tax cascading and consumer burden. Consequently, the court dismissed the appeals, upholding the Tribunal's decision to reject the appellant's claim for input tax credit on transportation services.

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