CENVAT Credit on GTA Services without Challan Allowed relying on Certificate by Service Provider: CESTAT Quashes Penalty against BESCO [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata Bench, while quashing the penalty imposed on BESCO Ltd, held that a CENVAT credit claim on Goods Transport Agency (GTA) services cannot be denied solely for the absence of a tax payment challan when the service provider has issued a valid certificate confirming the tax payment.

The appellant is engaged in the manufacture of railway parts and wagons. During its manufacturing process, BESCO procured materials from M/s Tata Sponge Iron Limited, which paid the service tax for transporting the goods to BESCO's premises and issued the relevant invoices.

The dispute arose when the Revenue denied CENVAT credit to BESCO on these transportation charges. The department contended that since BESCO could not produce the original challan proving that M/s Tata Sponge Iron Limited had paid the service tax, the credit was inadmissible. An order was passed denying the credit, and a demand for tax, along with interest and penalty, was raised against BESCO.

Shri Rishi Raju, counsel for the appellant, argued that M/s Tata Sponge Iron Limited had paid the requisite service tax and issued both invoices and a certificate explicitly stating that the tax on those invoices had been paid. He submitted that this certificate was sufficient proof to entitle them to the CENVAT credit.

The Authorised Representative for the Revenue reiterated the findings of the lower authorities, emphasising the necessity of the challan as primary evidence of tax payment for availing CENVAT credit.

The Single bench of Ashok Jindal, Member (Judicial), observed that the certificate issued by M/s Tata Sponge Iron Limited clearly certified that they had paid the service tax on the transportation charges for the relevant period.

The Tribunal noted that a sample challan was also part of the record. The Tribunal held that in light of the supplier's certificate, the appellant had correctly taken the CENVAT credit. Therefore, the proceedings and the consequent demand were not sustainable.

The Tribunal set aside the impugned order denying the credit. While allowing the appeal, the demand and penalty against the appellant were set aside.

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