TaxTMI 
TaxTMI 
2007 (10) TMI 389
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....spondent was manufacturing cotton yarn/fabrics and availing facility of Cenvat Credit. According to the Revenue, the liability in respect of 'Good Transport Agency' services was required to be discharged by the respondent by cash, because recipient of such service was liable to pay the tax. The liability to pay Service Tax, in respect of GTA services received, could not be discharged by utilizing Cenvat Credit of manufacturing activity. Show cause notice was, therefore, issued for recovery of Service Tax with interest and proposing penalty. 3. According to the respondent-assessee, the recipient was a deemed service provider for the purposes of GTA services. It was contended that, as per the explanation to Section 2(p) of the Cenvat Credi....
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....vat Credit Rules, 2004, which was operative during the relevant period, held that, the case of the respondent was squarely covered by the said explanation. It was held that, the services received by the respondent, on which the respondent was liable to pay service tax, became output services. In view of the said explanation, the appeal of the respondent was, therefore, allowed. 6. The learned authorised representative for the Department, strongly contended that, the provisions of Rule 2(p) were applicable only in a case, where a person liable for paying service tax was neither a taxable service provider nor a manufacturer of final product. It was submitted that, in the present case, the appellant was a manufacturer and, therefore, there ....
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....edit may be utilized for payment of service tax on any output service. According to him, the words 'output' service1 as defined in clause (p) of Rule 2, mean any taxable service provided by the provider of taxable service to customer, client etc. He pointed out that, the words 'provider of taxable service' were defined in clause (r) of Rule 2, so as to include a person liable for paying service tax. He, therefore, argued that, since, admittedly, the respondent was liable to pay service tax as a recipient of GTA service, the respondent was a "provider of a taxable service", which expression was included in the definition of 'output service'. He, therefore, submitted that, even without resorting to the explanation to Rule 2(p), since the resp....
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.... as the case may be, and the expression 'provider' and 'provided shall be construed accordingly; Explanation:- For the removal of doubts it is hereby clarified that if a person liable for paying service tax does not provide any taxable service or does not manufacture final products, the service for which he is liable to pay service tax shall be deemed to be the output service." 8.1 Under clause (p) of Rule 2, there is reference to taxable service provided by the provided of taxable service. Therefore, unless a taxable service is provided, ordinarily it would not fall under the definition of 'output service'. However, the explanation created a deeming fiction by providing that, if a person liable for paying service tax does not provide....