Cenvat Credit on GTA service availed for transport of goods from place of removal to buyer’s premises is not admissible w.e.f 01.04.2008: SC [Read Judgment]

GST Transportation Services -Taxscan

While hearing the case of Ultra Tech Cement Ltd, the Supreme Court held that cenvat credit on Goods Transport Agency- GTA service, availed for transport of goods from the place of removal to buyer’s premises is not admissible from 01.04.2008.

The assessee in the instant case is M/s Ultra Tech Cement Ltd engaged in the business of packing and clearing/forwarding of cement classifiable and also avail the benefit of Cenvat Credit facility under the Cenvat Credit Rules, 2004. During the period from January 2010 onwards the assessee has availed Cenvat Credit of service tax paid on outward transportation of goods through a transport agency from their premises to the customer’s premises.

During the assessment year the assessee gets finished goods from its parent unit on stock transfer basis and sells the same in bulk form and packed bags and the assessee claimed the same benefit for the said transport also.

However the Revenue observed that transport agency service used by the assessee for transportation of their final product from their premises to customers premises cannot be considered to have been used directly or indirectly in relation to clearance of goods from the factory in terms of Rule 2(l) of the Rules and as such cannot be considered as input service to avail Cenvat credit.

The bench comprising A K Sikri and Ashok Bhushan observed that “the three conditions which were mentioned explaining the ‘place of removal’ as defined under Section 4 of the Act, there is no quarrel up to this stage. However, the important aspect of the matter is that Cenvat Credit is permissible in respect of ‘input service’ and the Circular relates to the unamended regime. Therefore, it cannot be applied after amendment in the definition of ‘input service’ which brought about a total change. Now, the definition of ‘place of removal’ and the conditions which are to be satisfied have to be in the context of ‘upto’ the place of removal. It is this amendment which has made the entire difference. That aspect is not dealt with in the said Board’s circular, nor it could be.”

“Secondly, if such a circular is made applicable even in respect of post-amendment cases, it would be violative of Rule 2(l) of Rules, 2004 and such a situation cannot be countenanced,” the bench said.

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