Cenvat credit on transportation of rail & road

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Pavanendra (Querist)
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07 August 2014 Dear Sir,

We are the Manufacturers of Cement Products, One of the Transporter Send the Material trough Train. He Collect the Service Tax Amount in His Bill. The Transportation related to Stock Transfer.

My doubt is " If Transporter collect the Service Tax amount on Transportation of rail/Road from the Service Receipt,Then the Service that S.tax amount Can be eligible for Cenvat Credit or Not.

Please solve my problem.

Annu Agarwal

Annu Agarwal (Expert)
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07 August 2014 Dear Sir

1.There is no reverse charge on transporation of goods by rail .The service tax collected by the service provider is allowed as cenvat credit to service receiver i.e. you.

2.Though there is reverse charge in case of transporation of goods where 100% service tax is required to be paid by service recipent.A recent judgement has allowed that even where the liability to pay service tax was of service receiver under reverse charge ,but the same has been paid by service provider,then the service receiver shall not be asked to pay the service tax again.So in your case even if transporter collects the Service tax from you,then also the service tax amount is eligible for cenvat credit.
Case law:Umasons Auto Compo Pvt. Ltd. Vs. Commissioner of Central Excise & Customs, Aurangabad [2014 - T IOL – 126 – CESTAT - MUM]

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