TaxTMI 
TaxTMI 
2009 (8) TMI 962
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....ated 3-12-2004, was made to pay service tax on the GTA service received by, him for outward transport of goods and therefore he could not have availed and utilized credit for payment of the service tax. Further it is alleged .hat the appellant availed the benefit of Notification No. 32/2004-S.T., dated 3-12-2004 and therefore he could not have availed credit on the inputs/input service and he should have made the payment of service tax from PLA or cash. Therefore, a show cause notice was issued to the appellant on 27-12-2007, proposing recovery of service tax in cash, imposing penalty under Section 76 & 78 of the Act. The said show cause notice was adjudicated by the Assistant Commissioner, Central Excise, Kalol division Ahmedabad-III vide the impugned order. The recovery of service tax amounting to Rs. 85,605/- was confirmed, penalty of Rs. 85,505/- was imposed under Section 76 and penalty of Rs. 85,605/- was imposed under Section 78 of the Act. Aggrieved by the said order, the appellant has filed this appeal. Grounds of appeal 3. The appellant submitted that they have been made liable to pay service tax on services rendered by Goods Transport Agency to him as per Rule 2(1)(....
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....yment of GTA service. II. The second allegation is that the appellant has availed the benefit of Notification No. 32/2004-S.T., dated 3-12-2004 and therefore he was not entitled to take credit on the inputs/input service and therefore he should have made the payment of service tax by cash. Notification 35/2004-S.T., dated 3-12-2004 shift the liability of payment of service tax on GTA service on recipient of service. Notification 32/2004-S.T., dated 3-12-2004 allows abatement of seventy five percent in value of GTA service provided the service provider has not availed credit on the inputs/capital goods 'used' in providing such taxable service. In the present case the issue is whether the service tax on GTA service, paid by the appellant as a service recipient, could be paid from Cenvat credit account. And above two grounds, advanced by the department to raise the demand in the above issue, are no way relevant. 8. Further the findings put forth and reasoned by the lower authority in' the impugned order are reproduced in below : "I have carefully gone through the facts of the case available on records and submission made by the assessee vide their written submission dated ....
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....n cash under Section 75 of the Finance Act, 1994 read with Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944 along with interest under the provisions of Section 75 of the Finance Act, 1994. I further seen that the assessee has contravened the provisions of Finance Act, 1994 read with Cenvat Credit Rules by not paying service tax towards the service provided by them by suppressing the facts from the department. Therefore, they are liable for penal provision : under Section 78 and Section 76 of the Finance Act, 1994 read with Rule 15 of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944". I find that the lower authority has deviated from the basic issue of the case and passed a vague order to confirm the demand inasmuch as; (a) He has held that the appellant is a service provider of GTA service (b) He has held that the appellant has availed the benefit of Notification No. 32/2004-S.T., dated 3-12-2004 therefore he is not entitled to avail credit on inputs and capital goods and therefore he is required to make payment of service tax through challan. 9. Actual fact of the case is that the appella....
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....:- For the removel 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." There are numbers of judgment based upon the interpretation of above explanation wherein benefit is extended to the assessees. There are also some decisions, though few, in which the said explanation is differently interpreted. The above explanation was done away vide Notification No. 8/2006-C.E. (N.T.) dated 19-4-2006. But prior to that ambiguity was prevailing on the issue of payment of service tax on GTA service through Cenvat credit. Therefore the issue has to be decided within the ambit of statutory provisions as mentioned in Para-9 above. Though the appellant in this case is a' service recipient, by the legal fiction created through the provisions, the appellant has to pay the service tax as if he is the service provider. The rights and obligation of the 'deemed service provider' have been clearly stated in Section 68(2) of Finance Act, 1994 itself as under : "........the service tax thereon shall he ....
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....-8-2007. The relevant portion of the circular is reproduced as below; "This circular deals only with certain commonly raised issues relating to certain provisions of these rules that relate to service tax credit. The following are the issues which have been examined in this circular, - (a) Issue : Whether a manufacturer or taxable service provider having credit balance in his account can utilize that credit for payment of service tax on goods transport by road, as a consignor or as a consignee? Comments : In terms of Rule 3(4) of the Rules, Cenvat Credit can be utilized for the following payments : (a) any duty of excise payable on any final product; (b) ................................................. (c) ................................................. (d) service tax on any output service................ ...............However, the input credit taken on steel ingots cannot be used for payment of service tax applicable to goods transport agency. The reason is that the such manufacturer (consignor) is not the service provider. The transport service is being provided by the 'goods transport agency' and the excise assessee pays the service tax only for the ....