TaxTMI 
TaxTMI 
2007 (12) TMI 26
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....of service tax from the recipients of services. (c) The respondents availed the services of goods transport agency; in some cases, they paid the service tax as deemed service providers; they have taken credit of the service tax so paid by them as credit and utilized them towards discharging liability of payments of both service tax and excise duty. (d) The Original Authority held that the service tax paid by them as deemed service provider cannot be treated as tax paid on input service for them. He therefore held that service tax so paid is not permissible as credit under Rule 3(4) of the Cenvat Credit Rules, 2004. He disallowed varying amounts of credit taken as service tax and ordered recovery of interest. He also imposed penalties of varying amounts on the respondents under Rule 15 of the Cenvat Credit Rules. (e) The Commissioner (Appeals) disagreed with the findings of the Original Authority that the input service availed by the respondents was not related to output GTA services. He accordingly held that there was no restriction on utilization of Cenvat credit availed by the respondents towards payment of service tax on GTA services. 4. Ld. Advocate appearing for the respon....
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.... shall be deemed to be output service. In the present case, assessee is the manufacture of final product, hence GTA services, where he a deemed service provider and paying the service tax, will be treated as input service for him. As per Rule 3(4) of Cenvat Credit Rules, 2004, credit may be utilized for payment of - (a) any duty.... (b) an amount... (c) an amount....(d) an amount under sub- rule (2)... and (e) service tax on any output service. In view of the above, I find that even if the said assessee considered as a deemed output service provider in terms of Rule 2(p) and 2(r) ibid. the input service credit which they utilized towards payment of service tax on the service received by them from goods transport agencies cannot be considered as their input service since the same is not being permissible as per the Rule 3(4) of Cenvat Credit Rules, 2004 since it could not be treated as output service for the assessee. Thus I find that the said assessee wrongly availed and utilized credit for the reasons as discussed supra. Therefore such credit required to be disallowed and recovered under Rule 14 of Cenvat Credit Rules read with Section 73 of the said act along with interest und....
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.... transportation of such goods by road in a goods carriage. (1) "input service" means any service, - (i) used by a provider of taxable service for providing an output service, or (ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal, and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage up to the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation up to the place of removal; (p) "output service" means any taxable service provided by the provider of taxable service, to a customer, client, subscriber, pol....
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....the rules made thereunder shifts the responsibility of paying the service tax on them. Because of this deeming provision which made them responsible for paying the tax, they do not cease to be recipient of services. For the purpose of Cenvat credit, the duty paid by them that deemed service provider should be treated as tax paid on input services and should be extended the benefit of Cenvat credit. In other words, the goods transport service in relation to receipt of inputs in the factory has to be considered as input service. Whether the service tax was paid by the consignor of the inputs or by the respondents does not make any difference in so far as eligibility for credit of the duty paid. The nature of input service does not undergo a change merely because the tax is paid by the recipient. Similarly, merely because the respondent pays the service tax in respect of goods transport services availed for despatching their goods to various consignees, the service does not become input service and they do not become service providers. 6.8 The Tribunal in the case of M/s. India Cements has taken similar view, which is reproduced below: '3. After examining the provisions of the Cenva....
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....he credit of the tax paid by them in respect of input services is not justified. 7.2 In respect of the Goods Transport Agency Services, the service provider is undoubtedly goods transport agency. However, the liability to pay tax in certain cases has been shifted to either the consignor or to the consignee depending upon who actually paid the freight. In other cases where neither the consignee nor consignor is required to pay the service tax, the responsibility for paying service tax continues with the concerned Goods Transport Agency. The condition of not taking "credit of duty paid on inputs of capital goods used for providing such taxable service" necessarily should relate to the services actually rendered by the Transport Agency. The respondent has not actually rendered the said services; as a consignor he has not availed the credit of duty paid on inputs or capital goods for providing such taxable services; the respondent merely paid the tax which, in the normal course, should have been paid by the transport agency. 8. In view of the above, it is held as follows : (a) the service tax on goods transport agencies service paid by the respondents does not make them as service p....