By TIOL News Service

NEW DELHI, NOV 10, 2017: THE appellants are engaged in mining activities. They have engaged various transporters for transporting coal from extraction point of mine to coal handling plants situated at ground level. For such transportation charges, the appellants paid service tax considering the said service as transportation of goods by road, taxable under the category of Goods Transport Agency Service.

During the period March 2011 to May 2014, they have discharged service tax of Rs. 45,16,08,033/- on GTA services and availed the same as credit in terms of CCR, 2004.

The Revenue disputed the credit availablility to the appellant on the ground that the said services are not to be taxed under GTA services, rather the tax liability will arise only under the category of mining services introduced w.e.f. 01/06/2007.

On this ground, the whole of the Cenvat credit availed on such input services was sought to be denied.

The CCE ordered reversal of credit and also imposed equivalent penalty.

The appellant is before the CESTAT and inter alia submitsthat the classification of service and tax liability under different heading cannot be the basis for denial of credit as the amount paid as tax by them is taken as credit in terms of CCR.

The AR justified the impugned order of denial of credit.

The Bench observed -

+ We note that the denial of credit is only on the ground that the Department felt that the classification of service may be more appropriate under ‘mining services' introduced w.e.f. 01/06/2007. Without commenting on the merits of such claim, we note that the credit of tax paid on the input service irrespective of the classification cannot be denied as no provision of Cenvat Credit Rules is invoked in the original order to substantiate such denial.

Adverting to the decisions in Bajaj Allianz General Insurance Co. Ltd. - 2014-TIOL-1540-CESTAT-MUM, Mahalaxmi Textile Ltd. - 2002-TIOL-2230-SC-IT-LB, Ranbaxy Labs Ltd. - 2006-TIOL-438-HC-P&H-CX, the Tribunal further observed –

"8. The admitted position of the case is that the appellants discharged service tax and availed the services. In such situation, the denial of credit only on the ground that no service tax at all is payable on such input services is not sustainable. As already examined that the duty credit is available to the appellant and we hold that the same has been taken by them in terms of Cenvat Credit Rules, 2004 as applicable to the relevant time. The denial is not supported by any provision of the said rules. Even without examining the merits of classification of the input service, we find no justification to deny the paid tax for credit of the appellants…"

The order was set aside and the appeal was allowed with consequential relief.

(See 2017-TIOL-3954-CESTAT-DEL)