Bharat Fritz Werner Ltd Vs Commissioner of Central Tax North West Commissionerate (Karnataka High Court)
Summary: The Karnataka High Court allowed the appeals and held that CENVAT credit of service tax paid on outward Goods Transport Agency (GTA) services was available where, under the purchase orders, the manufacturers were required to deliver the goods at the buyers’ premises. The Court noted that the CESTAT itself had recorded that the goods were required to be supplied at the buyers’ premises and, in the case of Bharat Fritz Werner Ltd., the price included outward freight. Referring to Section 4(3)(c)(iii) of the Central Excise Act, 1944 and Rule 2(l) of the CENVAT Credit Rules, 2004, the High Court held that input service includes outward transportation up to the “place of removal”.
Following Madras Cements Ltd., the Court held that where sale concluded only upon delivery at the buyer’s address, the assessee was entitled to CENVAT credit on outward transportation. The Court also considered Circular No.1065/4/2018-CX dated 08.06.2018, which dealt with determination of the place of removal in light of Supreme Court decisions including Ultra Tech Cement, Roofit Industries and EMCO Ltd. On the facts, the High Court held that the buyers’ premises constituted the place of removal. It therefore answered the common question of law in favour of the assessees, held the Tribunal’s view unsustainable, allowed CEA Nos.56/2019 and 71/2019, and set aside the respective CESTAT orders.
