Custom, Excise & Service Tax Tribunal
M/S Reliance Industries Ltd vs Commissioner Of Central Excise & ... on 31 December, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. III Appeal No. ST/207/09 (Arising out of Order-in-Original No. 11/COMMR(KAP)/LTU/2009 dated 22.6.2009 passed by the Commissioner of Central Excise & Service Tax, LTU, Mumbai). For approval and signature: Honble Shri Anil Choudhary, Member (Judicial) Honble Shri P.S. Pruthi, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== M/s Reliance Industries Ltd. Appellant Vs. Commissioner of Central Excise & Service Tax, LTU, Mumbai Respondent Appearance: Shri J.C. Patel, Advocate for Appellant Dr. B.S. Meena, Addl. Commissioner (AR) for Respondent CORAM: SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) SHRI P.S. PRUTHI, MEMBER (TECHNICAL) Date of Hearing: 31.12.2014 Date of Decision: 31.12.2014 ORDER NO. Per: Anil Choudhary
The appellant, M/s Reliance Industries Ltd., is a manufacturer of excisable goods having its factory located at Patalganga, Allahabad and Hoshiarpur, etc. The appellant among others received service of transport of goods by road rendered by Goods Transport Agency within the meaning of Section 65(105)(zzp) read with section 65(50)(b) of the Finance Act, 1994. For the period 1.11.2006 to 29.2.2008, 4 show-cause notices were issued alleging that during the material period, the assessees were availing CENVAT Credit, in terms of Cenvat Credit Rules, 2004. The credit so availed was, among other, utilized for payment of service tax under the category of Goods Transport Agency. The notice alleged that the assessee should not have utilized the CENVAT Credit for payment of tax under Goods Transport Agency and instead should have discharged the tax liability in cash. In other words, it was alleged that sub-rule 3(4) of Cenvat Credit Rules, 2004, permits utilization of CENVAT Credit for payment of service tax on any output service. In the instant case, the assessee was discharging tax liability on such Goods Transport Agency under the reverse charge principle, was not providing any service. As no output service was provided, the utilization of CENVAT Credit for discharging tax liability was not in order. Therefore, the service tax paid, utilizing input credit was alleged as irregular and the taxes due were sought to be recovered in cash. Besides penalties were also sought to be imposed under Section 76 and 77 of the Finance Act, 1994.
2. The appellant appeared and contested the show-cause notices. The show-cause notice was confirmed and proposed demand of Rs.4,48,55,462/- along with order for recovery of interest under Section 75 and further equal amount of penalty was imposed under Section 76 and further penalty of Rs.5000/- was imposed under Section 77(2) of the Finance Act, 1994. Being aggrieved, the appellant is in appeal before this Tribunal.
3. The appellant have urged among others that the Commissioner has erred in holding that the appellant being recipient of Goods Transport Agency service and not provider of the said service and as such the said service was not appellants output service. Accordingly, the appellant was not entitled to pay Service Tax on the said service by utilizing the CENVAT Credit of Service Tax. The learned Counsel further urges that the issue is no longer res integra and the same has been settled by the Larger Bench of this Tribual in the case of Panchmahal Steel Ltd. Vs. Commissioner of Central Excise, Vadodara 2014 (34) STR 351 (Tri-LB), where the question before the Tribunal was: -
Whether a person who is not a actual service provider but discharges the Service Tax liability on the Taxable Services under Section 68(2) of the Finance Act, 1994, as a deemed service provider, is entitled by virtue of legal fiction to utilize the Cenvat credit inputs/input services/capital goods for payment of Goods Transport Agency Service Tax, even if he is not using such inputs/input services/capital goods for providing taxable services by virtue of deeming legal fiction? And, the Larger Bench of this Tribunal answered as under: -
3.?After hearing both sides, we find the dispute in this case pertains to the period prior to 1-3-2008 when there is no bar for such utilization. This issue has now been settled by the following decisions of the Honble High Courts :-
(a) CCE v. Nahar Industrial Enterprises Limited - 2012 (25) S.T.R. 129 (P & H).
(b) CCE v. Auro Spinning Mills - 2012 (26) S.T.R. 413 (H.P.) = 2012 (279) E.L.T. 349 (H.P.)
(c) CST v. Hero Honda Motors Limited - 2013 (29) S.T.R. 358 (Del.)
4.?In the above decisions, the Honble High Courts have held that there is no bar for payment of Service Tax from the Cenvat Account and there is no legal restriction for utilization of Cenvat credit for the purpose of payment of Service Tax on GTA services. The Honble High Court of Punjab & Haryana, in the case of Nahar Industrial Enterprises Limited (supra), held as under :-
7.?Learned counsel for the revenue has contended that the respondents cannot pay the Service Tax from the Cenvat credit availed by them. But this argument has no force, because a perusal of para 2.4.2 of C.B.E. & C.s Excise Manual of Supplementary Instructions shows that there is no legal bar to the utilisation of Cenvat credit for the purpose of payment of Service Tax on the GTA services.
8.?Apart from the above, even as per Rule 3(4)(e) of the Cenvat Credit Rules, 2004, the Cenvat credit may be utilized for payment of Service Tax on any output service.
9.?In the present case also, the Service Tax was paid out of the Cenvat credit on GTA services and, hence, the respondents were well within their right to utilize the Cenvat credit for the purpose of payment of Service Tax. The Commissioner (Appeals) as well as the Tribunal have rightly held that the respondents were entitled to pay the Service Tax from the Cenvat credit.
5.?We find that the other Honble High Courts have also taken the same view. In view of the above, the question referred to is answered in favour of the assessee. 3.1 The learned Counsel for the appellant also drew our attention to the ruling of the Hon'ble Karnataka High Court in the case of Union of India Vs. Flowserve Microfinish Valves Pvt. Ltd. 2014 (33) STR 634 (Kar), wherein the Tribunal following the ruling of this Tribunal in the case of Nahar Industrial Enterprises Ltd. 2007 (7) STR 26 (Tri) and India Cements Ltd. Vs. Commissioner of Central Excise 2007 (7) STR 569 (Tri) held that when the person discharging Service Tax liability is not the provider of output service, such recipient of taxable services even if it discharges its service tax liability, it is not entitled to avail credit of the Service Tax paid on the taxable services. However, there is no prohibition for utilizing the credit for the payment of Service Tax. Thus, in view of the ruling of the Hon'ble High Court, Larger Bench of this Tribunal, he prays for allowing the appeal.
4. The learned Addl. Commissioner (AR) relies on the impugned order and at the same time relies on the Division Bench ruling of this Tribunal in the case of ITC Ltd. Vs. Commissioner of Central Excise, Guntur 2011 (23) STR 41 (Tri-Bang), wherein the Division Bench taking note of the change in output service w.e.f. 19.4.2006 as defined under Rule 2(p) read with Section 68(2) read with Rule 2(1)(d) of the Service Tax Rules, 1994 read with Rule 2(q) and (r) of Cenvat Credit Rules, 2004 held that the persons providing some taxable output service/services and/or manufacturing dutiable final product, neither during the period prior to 19.4.2006 nor during the period w.e.f. 19.4.2006, the taxable service received by them, on which they were liable to pay Service Tax as recipient of service under the provisions of Section 68(2) of the Act, read with Rule 2(1)(d) should be treated as an output service and Service Tax on the same was required to be paid in cash and not by utilizing CENVAT Credit. The Revenue further relied that even for the period w.e.f. 19.4.2006, wherein the assessee, who is neither manufacturing any dutiable final product nor providing any taxable service, but liable to pay Service Tax on some taxable service received by him, cannot be treated as output service. During the period prior to 19.4.2006 while the taxable service received by the assessee on which it was liable to pay Service Tax, was deemed to be its output service by virtue of Explanation to Rule 2(p) but still required to pay Service Tax on such deemed output service through cash and not through CENVAT Credit. Accordingly, he prays for dismissal of the appeal.
5. Having considered the rival contentions, I accept the contention of the appellant that the issue is no longer res integra and the same stands settled in view of the Larger Bench ruling of this Tribunal in the case of Panchmahal Steel (supra) and the various High Courts. Thus, the impugned order is set aside and the appeal is allowed with consequential benefit, if any.
(Pronounced in Court)
(P.S. Pruthi) (Anil Choudhary)
Member (Technical) Member (Judicial)
Sinha
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