Toyota is Output Service Provider and can utilise Cenvat Credit on Output Services: Karnataka High Court [Read Judgment]

Toyota - output service provider - utilise cenvat credit - output services - Karnataka High Court - Taxscan

The Karnataka High Court held that the Toyota is an output service provider and can utilise cenvat credit on output services.

The respondent, M/s Toyota Kirloskar Motors claims to be manufactures of Multiutility Vehicles (MUV) for passenger cars and parts thereof falling under chapter sub-heading 8703.23.10 and 8708.10.90 respectively of the Central Excise Tariff and they are registered under the Central Excise and Service Tax. The respondent-assessee has received intellectual property services, commissioning and installation services and maintenance and repair services from their parent company situated abroad and GTA services from M/s Transystem Logistics International (P) Ltd., Bengaluru. They have utilized the credit availed on inputs, input services and capital goods for payment of service tax on the services from April 2006 to August 2006 totaling to Rs.33,30,39,951/-.

The Commissioner of Central Excise had issued the show cause notice calling upon the assessee to show cause as to why the input service tax utilized for payment of service tax on services viz., intellectual property services, commissioning and installation services and maintenance and repair services and also GRA services for the period under consideration should not be treated as irregular and recovery under Section 73 of the Finance Act, 1994, with interest and penalty should not be ordered.

The division bench of Justice S.Sujatha and Justice S.Vishwajith Shetty held that CESTAT has rightly applied the law laid down by this Court and the same deserves to be confirmed by the Court. The counsel has invited the attention of this Court to various relevant provisions of the Service Tax Act and Rules as well as the Cenvat Credit Rules, 2004.

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