NEW DELHI. Giving a mega relief to manufacturers who were denied Credit of Service Tax paid on Outward Transportation of goods from their factory; HC has ruled that the manufacturers are entitled for the Credit of the same during the relevant period.
HC vide AIT-2009-95-HC has ruled that the service of transportation up to the customer's doorstep, in the case of “FOR destination” sales where the entire cost of freight is paid and borne by the manufacturer, would be “input service” within the meaning of Rule 2( l) of the CENVAT Credit Rules
The Ruling of CESTAT in case of Gujarat Ambuja Cement AIT-2007-151-CESTAT was overruled by HC. CESTAT in the said ruling held that the credit covers duty paid on input materials as well as tax paid on services, used in or in relation to the manufacture of the 'final product'. Therefore, extending the credit beyond the point of duty paid removal of the final product would be contrary to the Scheme of Cenvat Credit Rules.
HC has ruled that the ‘input service’ has been defined to mean any service used by the manufacturer whether directly or indirectly and also includes, inter alia, services used in relation to inward transportation of inputs or export goods and outward transportation up to the place of removal. It has also remain un-controverted that for transportation purposes insurance cover has also been taken by the appellant which further shows that the ownership of the goods and the property in the goods has not been transferred to the seller till the delivery of the goods in acceptable condition to the purchaser at his door step. Accordingly, even the second condition that the seller has to bear the risk of loss or damage to the goods during transit to the destination stand fulfilled.
Though the issue is also pending with the Larger Bench of CESTAT in case of India Cement AIT-2007-308-CESTAT; the Ruling of Larger Bench is also expected to be in favour of manufacturers as the issue has already been settled by the High Court.
However, CBEC has also amended the definition of input service vide Central Excise Non-Tariff Notification No. 10/2008 dated 1st March 2008 as under:
“input service” means any service,-
(i) used by a provider of taxable service for providing an output service; or
(ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products, up to the place of removal,
and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation up to the place of removal;
No Service Tax Credit on Outward Freight for manufacturers
Service Tax Circular denying Credit on Outward Freight is not legally sustainable
Services received by a Developer or units of SEZ exempted from Service Tax
Service Tax on Repair/ Renovation/Widening of roads
Applicability of the provisions of the Export of Services Rules, 2005 in certain situations
Builder not liable to service tax on booking, construction and sale of flats
Credit of service tax paid on services used in Business can not be denied
Manufacturers allowed Credit on supplies to SEZ Developers
Service Tax on Educational Institutions under commercial coaching and training service
Services provided to Goods Transport Agency exempted from Service Tax
No Service Tax on service received from outside India prior to 18.4.2006
Exporters allowed CENVAT Credit of all input services up to the Port
CBEC clarifies issues related to service tax refund for exporters
Industry Associations not liable to Service Tax on Membership fees
No Service Tax on Not for profit organizations: CESTAT
Landlords bowled out by Tenants on Service Tax liability
Commercial Renting under service tax net from 1st June 2007
Centralised Registration of Service Tax Liberalised
Credit of Service Tax paid on Cellular Bill is admissible
Government extends refund of service tax paid by exporters
Service Tax Refund Claims of Exporters being rejected