TaxTMI 
TaxTMI 
2011 (9) TMI 406
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....50b) of the Finance Act, 1994. During the period from October 2005 to September 2006, the respondents were liable to pay service tax on the Goods Transport Agency service as a recipient of the service, in terms of the provisions of Section 68 (2) of the Finance Act, 1994. The respondent did not discharge the service tax liability in cash but utilized Cenvat credit available in their accounts. Accordingly a show-cause notice dated 14/03/2007 was issued to them for recovery of Service tax under Section 73 of the Finance Act, 1994 and interest thereon under Section 75 of the said Finance Act. The show-cause notice also proposes to impose penalty on the respondent under Sections 76 and 77 of the Finance Act, 1994. The case was adjudicated by the Additional Commissioner vide order dated 18/06/2008 wherein he confirmed the demand of service tax of Rs.5,64,720/- under Section 73 of the Finance Act, 1994 towards the service tax liability of the respondent. He also confirmed interest on the said amount under Section 75 of the said Finance Act and also imposed an equivalent penalty under Section 76 of the Finance Act, and also a penalty of Rs.1,000/- under Section 77 of the Finance Act, 1994....
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.... of the transport of goods by road service. The Ld. Counsel also relies on the similar judgement of the Tribunal in the case of Bhushan Power & Steel Ltd., Vs. CCE, BBSR-II, reported in 2008 (10) STR 18 (Tri-Kolkata). The Counsel further submits that the hon ble Allahabad High Court in Xerox India Ltd., Vs. CCE, Meerut-II, reported in 2011 (270) ELT 651 (All.) has held that when there are conflicting decision by different Benches on the same facts and the matter should be referred to a Larger Bench to maintain institutional integrity. The learned Counsel also submits that as the issue involves interpretation of law, no penalty is imposable in such cases. 2.5 The Ld. DR appearing for the department also submits that the hon ble High Court of Karnataka had occasion to examine the admissibility of Cenvat credit of service tax on various services. In two cases, namely, CCE, Bangalore Vs. Switchgear & Control Technics Pvt Ltd., reported in 2011 (269) ELT 496 (Kar) and CCE & ST, Mysore Vs. Larsen & Toubro Ltd., reported in 2011 (22) STR 266 (Kar) and in both these cases the hon ble High Court held that the question relating to admissibility of Cenvat credit involved determination....
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....r of the output service in the absence of another deeming provision. Further to utilize Cenvat credit two conditions are required to be satisfied (i) the inputs or input services should have suffered duty/tax and (ii) such inputs or input service should be utilized in the manufacture of dutiable final products or in the provision of a taxable output service. Further under Rule 3 (3), provider of output service is allowed to take Cenvat Credit of the duty paid on the inputs or input services received, only if such inputs or input services are used in the providing of such service. For the period, prior to 19/04/2006, though receipt of GTA service is deemed as an output service, the second condition that the inputs or input services on which the credit is taken has to be utilized in the providing of a taxable output service has to be satisfied. Obviously, when a person receives a service, he cannot be said to have utilized any input or an input service in the rendering of such service. Firstly he is not a provider of a output service and secondly no input/input service can go into the receipt of a service. Therefore, as per the clear provisions of law, Cenvat credit cannot be taken i....
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....utput service being provided by them. 8.1.1As regards the persons of category (b) to which the Appellant belong, even though during period prior to 19-4-2006, by virtue of explanation to Rule 2(p), the service received by them, on which they are liable to pay tax under Rule 2(1)(d) of Service Tax Rules, 1994, is deemed to be their output service , they could not take Service tax credit in respect of other taxable services received or input duty credit in respect of duty paid goods received, as they are not manufacturing any dutiable final product or providing any taxable service. In terms of provisions of Rule 3(1) of the Cenvat credit Rules, 2004, credit of Service tax paid on input services received and/or of Central excise duty paid on inputs/capital goods received can be taken only if the input services received and inputs and capital goods received are used in or in relation to manufacture of final products or providing of taxable output services. For the persons of category (b), in respect of their deemed output service , which is the service received by them on which they are liable to pay the tax, other taxable services received by them can not be deemed to be the i....