2026-VIL-1493-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax – Cenvat Credit on Outward transportation credit - Place of removal in FOR contracts - Eligibility of credit on goods transported to buyers premises - Appellant is battery manufacturer and Input Service Distributor who transported batteries from depot to dealers on FOR basis bearing freight cost and availed CENVAT credit on Goods Transport Agency services - Whether CENVAT credit on outward transportation up to place of removal is legally admissible - HELD - The Board vide Circular 08.06.2018 clarified that eligibility of CENVAT credit on GTA services depends on whether buyers premises qualify as place of removal and this has to be decided on specific facts including terms of sale, transfer of risk and ownership during transit. In FOR destination contracts where freight forms part of invoice value, risk of loss during transit remains with seller, and property in goods passes only at buyers premises, the retailers premises constitutes the place of removal – The FOR destination terms, inclusion of freight in invoice value, retention of risk by Appellant during transit and transfer of property only upon delivery at retailers premises support that retailers premises constituted the place of removal. Payment of duty or VAT at depot cannot be treated as conclusive for determining place of removal under CENVAT Credit Rules. GTA service used for transportation up to such place is input service within meaning of Rule 2(l) and Appellant is eligible to avail CENVAT credit thereon – The credit on outward transportation is admissible - Credit on manpower supply and depot rent services - Input service definition - Nexus with manufacturing activity - Appellant procured manpower at Chennai office and deployed to various factories while godowns were used for storage of finished products - Whether credit on manpower supply and godown depot rent is legally admissible - HELD - The Revenue's contention that services related to post manufacture and post sale activities at customers premises is factually misplaced since the place of removal has been held to be premises of retailers dealers and therefore contention that services are post sale activities cannot be sustained - Rule 2(l) of CCR, 2004 does not restrict input service credit merely because activity is undertaken after sale of goods except where service relates to trading in goods. Activities such as advertising, sales promotion, market research, accounting, auditing though having post sale component may continue to qualify as input services provided requisite nexus with output service or use in manufacture of goods is established. Manpower supply services used for production, packing, maintenance, storage and allied manufacturing activities and godown depot rent used for storage of finished products have requisite nexus with Appellants manufacturing activity - Denial of CENVAT credit on manpower supply and godown depot rent is unsustainable and is set aside - Service Tax - Demand under Rule 14 of the CCR against ISD - The controversy regarding demand under Rule 14 of the CENVAT Credit Rules against the ISD became academic since the Appellant was found eligible for CENVAT credit on outward transportation and manpower supply/depot rent services - Short payment of Service Tax on reverse charge - Limitation period - Invocation of extended period - Appellant received batteries at Chennai depot and paid Service Tax under reverse charge on GTA services and distributed credit through ISD mechanism - Show Cause Notice issued beyond normal period of limitation prescribed under Section 73(1) of Finance Act 1994 - Whether demand is barred by limitation when extended period is not validly invoked - HELD - The normal period for respective periods from January 2010 to March 2013 expired between 25.04.2011 and 25.04.2013 and for subsequent periods expired on 25.04.2014 and 25.10.2014 respectively. SCN dated 30.03.2015 was therefore issued beyond normal period and can survive only if extended period under proviso to Section 73(1) is validly invoked - The mere fact that alleged short payment was noticed during audit cannot by itself justify invocation of extended period. Department is required to establish fraud, collusion, wilful misstatement, suppression of facts or contravention with intent to evade Service Tax. Appellants contend that relevant particulars were duly disclosed in ST-3 returns and there was no suppression or wilful misstatement with intent to evade payment. Mere non payment of duty or failure to obtain registration absent of fraud suppression or willful misstatement is insufficient to attract extended limitation period - The case for invoking extended period is not made out and demand is barred by limitation.
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