2019 (6) TMI 513 - AT - Service Tax

CENVAT credit - input services - Haulage charges - place of removal - extended period of limitation - service tax law as made applicable to Central Excise laws - HELD THAT - The Hon ble Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE, BELGAUM VERSUS M/S. VASAVADATTA CEMENTS LTD. 2018 (3) TMI 993 - SUPREME COURT held that tax paid on the transportation of the final product from the place of removal upto the first point, whether it is depot for the customer, has to be allowed. In the case of COMMR. OF CUS. C. EX., HYDERABAD-III VERSUS GREY GOLD CEMENTS LTD. 2014 (9) TMI 673 - ANDHRA PRADESH HIGH COURT the Hon ble High Court of Hyderabad held that Service Tax and Excise Duty are consumption taxes to be borne by the consumer and therefore if credit is denied on transportation service the levy of service tax on transportation will become a tax on business rather than being a consumption tax. The Tribunal observed that the submission of the Revenue that the CENVAT credit cannot be allowed for service if the value thereof does not form part of the value subjected to excise duty runs counter to the fundamental concept of Service Tax. Considering the fundamental concept of Service Tax, it cannot be said that Cenvat credit cannot be allowed for service if the value thereof does not form part of the value subjected to Excise duty. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Availment of credit of Service Tax paid on Haulage charges beyond the place of removal.
2. Alleged violation of Cenvat Credit Rules, 2004.
3. Applicability of extended period for demand.
4. Interpretation of input service under Rule 2 of CCR, 2004.
5. Ownership and risk of goods during transportation.
6. Benefit of tax on goods sent by transport.
7. Definition of "Place of Removal."
8. Entitlement to Cenvat credit on outward transportation of goods.
9. Legal precedence regarding Cenvat credit on transportation services.
10. Taxation of transportation services as consumption taxes.

Analysis:
1. The case involved M/s. Indian Oil Corporation Ltd. availing credit of Service Tax on Haulage charges beyond the place of removal. The Department alleged violation of Cenvat Credit Rules, 2004, leading to a Show Cause Notice.
2. The appellant argued that the demand was partially barred by limitation and that there was no intent to evade duty, being a public sector undertaking.
3. The Tribunal observed the definition of input service under Rule 2 of CCR, 2004, and the services considered integral for business activities, including transportation.
4. Ownership and risk of goods during transportation were crucial factors in determining the entitlement to credit on outward transportation services.
5. Legal interpretations and circulars were cited to support the appellant's claim, emphasizing the importance of ownership, risk, and inclusion of transportation charges in the sale price for availing Cenvat credit.
6. Precedents from CESTAT, High Courts, and the Supreme Court were referenced to establish the eligibility of Cenvat credit on outward transportation services.
7. The High Court rulings highlighted the significance of allowing Cenvat credit on transportation services to avoid taxing businesses instead of consumers.
8. Ultimately, following the Supreme Court's judgment, the Tribunal set aside the impugned order, allowing the appeal with consequential benefits to the appellant.