Custom, Excise & Service Tax Tribunal
Commissioner Of Customs, Central ... vs M/S Aster Teleservices (P) Ltd on 4 October, 2012
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, SOUTH ZONAL BENCH
AT BANGALORE.
Bench Single Member
Court I
Date of hearing: 04.10.2012
Date of decision: 04.10.2012
Service Tax Appeal No. 1802 of 2010
[Arising out of Order-in-Appeal No. 53/2009 (H-III) S. Tax dated 28.09.2009, passed by the Commissioner of Central Excise,
Customs and Service Tax (Appeals- I & III), Hyderabad.]
For approval and signature:
Honble Shri P. G. Chacko, Member (Judicial)
1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not ? Yes
3. Whether Their Lordships wish to see the fair copy of the Order? Seen
4. Whether Order is to be circulated to the Departmental authorities? Yes
Commissioner of Customs, Central Excise & Service Tax, Hyderabad.
Appellant
Versus
M/s Aster Teleservices (P) Ltd.
Respondent
Appearance:
Mr. N. Jagdish, Superintendent (AR) for appellant Ms. Preetha. M., Advocate for respondent CORAM :
Honble Mr. P.G. Chacko, Member (Judicial) ORDER NO. dated 04.10.2012 Perused the records and heard both sides. The respondent was engaged in the manufacture of excisable goods during the material period (April 2007 to February 2008). During the said period, they were utilising the services of Goods Transport Agencies (GTA) for bringing inputs into their factory as well as clearing final products from the factory. They were also paying service tax on the GTA services by virtue of the relevant provisions of the Service Tax Rules, 1994. They took CENVAT credit of the service tax so paid and utilised the same for payment of duty of excise on their final products. A dispute arose between them and the department as to whether, for payment of service tax on GTA services, they could utilise CENVAT credit of the service tax paid on other input services and duty of excise paid on inputs, such input services and inputs having been utilised in, or in relation to, manufacture of final products. This dispute made its way into a show-cause notice wherein service tax of Rs. 2,00,274/- (education cesses included) was demanded as service tax short-paid on GTA services to the extent CENVAT credit was utilised, and penalties were proposed. The demands and allied proposals were contested by the party. The original authority, in adjudication of the dispute, confirmed the above demand against the assessee and imposed penalties on them. It appears from the order-in-original that the demand was raised on GTA services used for outward transportation of final products from the factory. Aggrieved by that order, the assessee preferred an appeal to the Commissioner (Appeals) and obtained relief. The appellate authority considered the assessee as provider of GTA services and, accordingly, held that utilisation of CENVAT credit of the service tax/excise duty paid on input services/inputs, for payment of service tax on GTA services was in order. The appellate Commissioners order was reviewed in the department and, accordingly, the present appeal was filed.
2. The learned Superintendent (AR) refers to the definition of output service (Rule 2(p) of the CENVAT Credit Rules, 2004) as also to the definition of input service (Rule 2(l) of the CCR, 2004) and submits that, with the omission of the Explanation to Rule 2(p), GTA service availed by a manufacturer of excisable products for clearance of such goods from factory can hardly be treated as output service and consequently no CENVAT credit (whether of service tax paid on any input service or of excise duty paid on input) could be utlised to pay service tax on the GTA service. According to the learned Superintendent (AR), the GTA service on which the respondent paid service tax through utilisation of CENVAT credit was only an input service vis-a-vis manufacture and clearance of the final products. The learned Superintendent (AR) has relied on a few decisions also, cited below :
(i) ITC Ltd. vs. Commissioner of C. Ex., Guntur [2011 (23) S.T.R. 41 (Tri.-Bang.)]
(ii) CCE, Ghaziabad vs. M/s BPL Display Devices Ltd. [2011-TIOL- 841-CESTAT-DEL]
(iii) UNI Deritend Ltd. vs. Commissioner of Cus. & C. Ex., Nagpur [2012 (25) S.T.R. 475 (Tri.-Mumbai)]
(iv) Alstom Projects India Ltd. vs. Commissioner of C. Ex., Coimbatore [2008 912) S.T.R. 23 (Tri.-Chennai)].
3. The learned counsel for the respondent refers to a few definitions given under Rule 2 of the CCR, 2004 viz. output service, person liable for paying service tax, provider of taxable service, etc. She also points out that the demand raised in the show-cause notice was apparently based on the then existing Explanation to Rule 2(p) of the CCR, 2004. It is submitted that this Explanation was applicable only to a person who was neither manufacturer of final products nor provider of output service and was not applicable to the respondent who was a manufacturer of excisable goods. Therefore, it is argued, omission of the Explanation with effect from 19.4.2006 was of no consequence insofar as the respondent was concerned. Further it is submitted that the definition of output service itself was substantially amended with effect from 1.3.2008, whereby GTA service came to be specifically excluded from the ambit of the definition. Impliedly, before the said amendment of the definition of output service, GTA service was very much within the ambit of output service. In this context, it is further submitted that the definitions of person liable for paying service tax and provider of taxable service have ever remained unchanged. The respondent was admittedly liable for paying service tax on GTA service by virtue of Rule 2(1)(d) of the Service Tax Rules, 1994 and, for that matter, squarely fell within the scope of the definition of provider of taxable service. It would follow that the respondent should be deemed to have provided GTA service during the period of dispute and, consequently, be entitled to utilise CENVAT credit for payment of service tax thereon. The following decisions have been cited in support of these arguments :
(i) Commissioner of C. Ex., Chandigarh vs. Nahar Exports Ltd. [2008 (9) S.T.R. 252 (Tri.-Del.)]
(ii) Commissioner of C. Ex., Chandigarh vs. Nahar Industrial Enterprises Ltd. [2012 (25) S.T.R. 129 (P & H)]
(iii) Shree Rajasthan Syntex Ltd. vs. Commissioner of C. Ex., Jaipur [2011 (24) S.T.R. 670 (Tri.-Del.)]
(iv) Final Order No. 838/2011 dated 11.11.2011 in Service Tax Appeal No. 1583 of 2010 (M/s Hind Spinners vs. Commissioner of C. Ex., Bhopal).
4. I have given careful consideration to the submissions. The period of dispute in this case is from April 2007 to February 2008. As both sides elaborately argued with reference to an Explanation to Rule 2(p) (definition of output service), this provision is reproduced below :
(p) output service means any taxable service provided by the provider of taxable service, to a customer, client, subscriber, policy holder or any other person, as the case may be, and the expressions provider and provided shall be construed accordingly;
Explanation For the removal 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. The above Explanation was omitted with effect from 19.4.2006, i.e., prior to the period of dispute. The definition of output service itself was amended with effect from 1.3.2008, i.e., after the period of dispute. Though this amendment does not have retrospective effect, I shall reproduce it below, as it was in the focus of the rival arguments.
(p) output service means [any taxable service, excluding the taxable service referred to in sub-clause (zzp) of clause (105) of section 65 of the Finance Act, provided by the provider of taxable service], to a customer, client, subscriber, policy holder or any other person, as the case may be, and the expressions provider and provided shall be construed accordingly. It has been argued by the learned counsel for the respondent that, as GTA service (the taxable service referred to in Section 65 (105) (zzp) of the Finance Act, 1994) was specifically excluded from the definition of output service with effect from 1.3.2008, the said service should be held to have had been included in the definition prior to the said date. In other words, when the respondent was paying service tax on GTA service, they were doing so on an output service and, therefore, they were entitled to utilise CENVAT credit for payment of such tax. The definition of person liable for paying service tax and the definition of provider of taxable service given under Rule 2 (q) & (r) respectively seem to be supportive of this argument. It is not in dispute that the respondent was liable for paying service tax on GTA service by virtue of Rule 2(1)(d) of the Service Tax Rules, 1994. If that be so, the respondent would squarely fit in the definition of provider of taxable service. In other words, the respondent who was liable to pay service tax on GTA service was also to be deemed to be the provider of that service. This is precisely view taken by the lower appellate authority and the same is supported by the decision cited by the learned counsel for the respondent. All the cited decisions were rendered for periods prior to 1.3.2008, the date on which GTA service came to be excluded from the scope of the definition of output service. The decision rendered by this Tribunal in the case of ITC Ltd. (supra) seems to have been correctly distinguished in the case of Shree Rajasthan Syntex Ltd. (supra). The Tribunals decision in the case of Commissioner of C. Ex., Chandigarh vs. Nahar Industrial Enterprises Ltd. [2007 (7) S.T.R. 26 (Tri.- Del.)] as upheld by the Punjab & Haryana High Court was appropriately relied on in the said case of Shree Rajasthan Syntex Ltd. The Honble High Courts decision is to the effect that there is no legal bar to utilisation of CENVAT credit for the purpose of payment of service tax on GTA service by the deemed provider thereof. The Honble High Court answered the following question of law in the affirmative :
Whether a person who is not an actual service provider, but discharges the service tax liability on the Taxable Services, under Section 68(2) of Finance Act, 1994, as a deemed service provider, is entitled to avail the CENVAT credit on inputs/input services/capital goods for payment of GTA service tax, even if he is not using such inputs/input services/capital goods for providing taxable services by virtue of deeming legal fiction? It is pertinent to note that the Honble High Court was dealing with the above issue for a period prior to 19.4.2006, the date on which the Explanation to Rule 2(p) of the CCR, 2004 was omitted. Even for a period subsequent to the omission of the said Explanation, as rightly argued by the learned counsel for the respondent, the amendment would have little impact on the present case inasmuch as the respondent was a manufacturer of excisable goods and not one of the persons referred to in the text of the Explanation. In any case, the view taken by the learned Commissioner (Appeals) is squarely supported by the Honble High Courts judgment.
5. In the result, this appeal of the department gets dismissed.
(Pronounced and dictated in open court)
(P.G. Chacko) Member (Judicial)
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