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2015 (12) TMI 1059 - CESTAT NEW DELHI

2015 (12) TMI 1059 - CESTAT NEW DELHI - 2016 (42) S.T.R. 52 (Tri. - Del.) - Denial of CENVAT Credit - whether appellants are entitled to use the Cenvat Credit to discharge their service tax liability in regard to GTA and BAS service, when they are not the service provider for such services - Held that:- Finance Act, 1994 is the law which deals with taxability of services. Taxation of Service Rules, 2006 enacted under the Finance Act, 1994 inter alia lays contains provisions governing the service .....

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Commissioner (Appeals) has upheld the penalty imposed under Section 76 of Finance Act, observing that the appellant ought not to have paid the service tax from Cenvat credit, but should have paid in cash. The issue being interpretational and as the appellant has already discharged the service tax, we consider that imposing penalty would not be appropriate and the same is set aside in terms of section 80 of the Finance Act, 1994. We would also like to observe that though the Commissione .....

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The appellants are registered with Central Excise department for the manufacture of Bulk drugs and are also registered under the Service Tax Rules, 1994 for Goods Transport Agency (GTA) service and Business Auxiliary (BAS) service. The appellants are service recipient of GTA services and are liable to pay service tax under reverse charge mechanism as per sub-section (2) of Section 68 of the Finance Act, 1994. They are also service recipient of BAS from foreign based export agents to whom they .....

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that as per Rule 5 of Taxation of Services Rules, 2006, the appellants ought to have paid the service tax in cash and they are not entitled to utilize Cenvat Credit for payment of their service tax liability. A show cause notice was issued, and after adjudication, the original authority confirmed the demand of service tax of ₹ 13,18,181/- and ₹ 5,93,232/- along with interest and also imposed equal amount of penalty. The appellants filed appeal before the Commissioner (Appeals) who vi .....

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Credit to discharge service tax towards GTA services is settled by various judgments. Some of the decisions placed before us are as follows:- 1. CCE vs. Panchmahal Steel Ltd.- [2015 (37) STR 965 (Guj)]; 2. CST vs. Hero Handa Motors Ltd.- [2013 (29) STR 358 (Del)] 3. CCE, Chandigarh vs. Nahar industrial Enterprises Ltd.- [2012 (25) STR 129 (P&H)] 5. In the above judgments, it has been categorically held that the assessee can utilize Cenvat Credit to discharge the service tax liability towards .....

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paying service tax and clause (iv) of the definition is: (iv) in relation to any taxable service provided or to be provided by any person from a country other than India and received by any person in India under section 66A of the Act, the recipient of such service. Rule 2(p) of Cenvat Credit Rules, 2004, prior to 1.3.2008 read as under:- Output service means any taxable service provided by provider of taxable service to a customer, client subscriber, policy holder, or any other person, as the .....

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rred to as -Taxation of Service Rules, 2006) is as under: Rule 5 : Taxable services not to be treated as output services:- The taxable services provided from outside India and received in India shall not be treated as output services for the purposes of availing credit of duty of excise paid on any input or service tax paid on any input services under Cenvat Credit Rules, 2004. 6. The appellant is liable to pay service tax on BAS received from non-resident commission agents on reverse charge mec .....

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vat credit scheme has been framed for the purpose of availing and utilizing credit. In the said rules, the term provider of taxable service has been defined to include a person who ultimately pays service tax. The intention is to entitle the person liable to pay service tax to utilize the credit for paying such tax. If a person liable to pay service tax is not allowed to utilize the credit to pay service tax, then this definition would be nugatory. 8. The learned DR on the other hand, relied on .....

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n Services (Provided from outside India and received in India) Rules, 2006, it is very clear that appellant is deemed service provider only for the purpose of service tax liability and for the purpose of Cenvat Credit they cannot be treated as provider of taxable services and I agree with the adjudicating authority that these provisions are specific and will prevail over general provisions. Hence the appellant was not entitled to utilize cenvat credit for payment of such service tax liability an .....

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