2009 (10) TMI 403 - AT - Service Tax

Tribunal allows credit for service tax paid on transportation and management consultant services

The Tribunal set aside the denial of credit of Service tax paid for various services, including transport of goods and management consultant's service. ... Cenvat Credit on goods transport agency service – C.B.E.& C. Circular dated 23.08.2007- The contention of the appellants is that the credit was denied wrongly. The appellants are engaged in the manufacture of PVC pipes and the goods are being cleared on FOR basis and the payment made towards freight is part of sale price of the goods. In the light of Board’s Circular dated 23-8-2007 and decision of the Hon’ble Punjab & Haryana High Court in the case of Ambuja Cements Ltd. v. Union of India reported in 2009 -TMI - 32932 - PUNJAB & HARYANA HIGH COURT, held that- the impugned order is set aside and the matter is remanded to the adjudicating authority to decide afresh. The appeals are disposed off by way of remand. Issues:Challenge to denial of credit of Service tax paid for transport of goods, courier service, general insurance service, maintenance & repair service, management consultant's service, and authorized service station.Analysis:The appellants contested the denial of credit of Service tax paid for various services, claiming it was done wrongly. They argued that as manufacturers of PVC pipes, the freight payment made for goods transported on FOR basis is part of the sale price, making them eligible for credit. They cited a Board's Circular and a decision by the Punjab & Haryana High Court to support their claim.Regarding other services, the appellants asserted that some were related to the manufacture of finished goods, making the Service tax paid on those services eligible for input credit. They referenced a decision by the Bombay High Court in support of their argument.On the other hand, the Revenue contended that factual verification was needed to determine if goods were indeed cleared on FOR basis and if freight was part of the sale price. They also argued that in some cases, the tax paid on general insurance was for private vehicles, justifying the denial of credit.In the judgment, the Tribunal referred to the decision of the Punjab & Haryana High Court and the Board's Circular to establish the admissibility of credit when goods are on FOR basis and freight charges are part of the value of excisable goods. The Tribunal noted that verification was required to determine if the conditions set by the Circular were met. Additionally, the Tribunal cited the Bombay High Court decision, highlighting the need for the assessee to prove the nexus between services and their use in or in relation to the manufacture of goods.Consequently, the Tribunal set aside the impugned order and remanded the matter to the adjudicating authority for fresh consideration. The authority was instructed to take into account the relevant decisions, the Board's Circular, and provide the appellants with an opportunity to be heard. The appeals were disposed of through remand.