Service Tax Paid on Goods Transport Agency Service Eligible for CENVAT Credit: CESTAT [Read Order]

Customs Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that taxes paid on Goods Transport Agency Services  would be eligible for CENVAT credit. The two member bench observed that the entire situation is revenue-neutral and  in such situations, the extended period cannot be invoked by Revenue.

The assessee, Harinii Colours is engaged in manufacture and export of knitted garments. The assessee get their orders for supply of goods to M/s.Bonprix, Germany through M/s.JPS Trading. The company viz. M/s.JPS Trading is based in Dubai and is a sourcing and quality monitoring agent of goods shipped to M/s.Bonprix, Germany. M/s.Fashion Force, Tirupur, is the Indian office of M/s.JPS Trading Company, Dubai. The appellant is one of the suppliers of goods to M/s.Bonprix, Germany through M/s.JPS Trading, Dubai. The appellant receives payments from their overseas buyer through M/s.JPS Trading after the deductions of bonus, inspection charges and recycling compensation by the buyer.

Assessee contended that the appellant had used the transport services for export of goods. Services in relation to export cannot be subjected to levy of service tax. It is also submitted that even if the appellant had paid service tax, the same would be eligible as credit to the appellant and the entire exercise, in any case, is revenue-neutral.

Revenue contended that M/s.JPS Trading, through its local office, helps the appellant in getting the export orders and to receive payment for the goods supplied to Bonpprix, Germany. Further, M/s.JPS Trading, through its local office, also helps the appellant in supplying the goods of desired quality, by undertaking technical inspection of the goods of the appellant. The above said activities resulted in furtherance of the business of the appellant and would fall under the category of ‘Commission Agent’ and therefore is subject to levy of service tax.

The bench comprising M.S. Sulekha Biwi C.S( Member, Judicial ) and Vasa Sheshagiri Rao( Member, Technical ) held that the demand, interest and penalties in regard to ‘GTA Service’ is set aside for the extended period. The details as to whether GTA services were used only for export is not before us. Therefore, the appellant is liable to pay the tax on GTA services for the normal period along with interest. The bench also pointed out that Service Tax Paid on Goods Transport Agency Service Eligible For CENVAT Credit

The assessee was represented by M.N.Bharathi. Revenue was represented by M.Selvakumar.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates