Commissioner, Central GST And Central Excise Vs. Gujarat Guardian Limited (Gujarat High Court)
Outward transport service used by the manufactures for transportation of finished goods from the place of removal up to the premises of the purchaser is covered within the definition of input service provided in rule 2(l) of the Cenvat Credit Rules, 2004.
FULL TEXT OF THE HIGH COURT JUDGMENT / ORDER IS AS FOLLOWS:-
1. Revenue is in appeal against the judgement of the Customs Excise and Service Tax Appellate Tribunal dated 12.05.2017 raising following questions for our consideration:
“1. Whether Hon’ble CESTAT is right in holding that the services by a manufacturer for outward transportation of final products from the place of removal should be treated as an input service in terms of Rule 2(I)(ii) of the CENVAT Credit Rules, 2004?
2. Whether Respondent is eligible to take CENVAT Credit of the Service Tax on the value of such services?
3. Whether in the facts and circumstances of the case, was the Hon’ble Tribunal justified in allowing the CENVAT Credit availed by the Respondent in respect of service tax paid on Goods Transport Agency service in respect of outward transportation of the goods beyond the place of removal?”
2.It is not in dispute that the issues arising in the present Tax Appeal are squarely covered by the judgement in case of Commissioner of C.Ex. & Customs vs. Parth Poly Wooven Pvt. Ltd. reported in 2012 (25) S.T.R. 4 in which it was observed as under:
“18. Bearing in mind the above judicial pronouncements, if we revert back to the definition of the term ‘input service’, as already noticed, it is coined in the phraseology of “means and includes”. Portion of the definition which goes with the expression means, is any service used by the manufacturer whether directly or indirectly in or in relation to the manufacture of final products and clearance of final products from the place of removal. This definition itself is wide in its expression and includes large number of services used by the manufacturer. Such service may have been used either directly or even indirectly. To qualify for input service, such service should have been used for the manufacture of the final products or in relation to manufacture of final produce or even in clearance of the final product from the place of removal. The expression ‘in relation to manufacture’ is wider than ‘for the purpose of manufacture’. The words ‘and clearance of the final products from the place of removal’ are also significant. Means part of the definition has not limited the services only up to the place of removal, but covers services used by the manufacturer for the clearance of the final products even from the place of removal. It can thus be seen that main body of the definition of term ‘input service’ is wide and expansive and covers variety of services utilized by the manufacture. By no stretch of imagination can it be stated that outward transportation service would not be a service used by the manufacturer for clearance of final products from the place of removal.
19. When we hold that outward transportation would be an input service as covered in the expression ‘means’ part of the definition, it would be difficult to exclude such service on the basis of any interpretation that may be offered of the later portion of the definition which is couched in the expression ‘includes’. As already observed, it is held in several decisions that the expression ‘includes’ cannot be used to oust any activity from the main body of the definition if it is otherwise covered by the expression ‘means’. In other words, the expression ‘includes’ followed by ‘means’ in any definition is generally understood to be expanding the definition of the term to make it exhaustive, but in no manner can the expression ‘includes’ be utilized to limit the scope of definition provided in the main body of the definition. To our mind this was also not the intention of the Legislature in the present case.
20. There, of course, are certain areas which still remain to be cleared. It was vehemently contended before us by the counsel for the Revenue that later portion of the definition which provides for the inclusion clause limits the outward transportation service up to the place of removal. That being so, according to them, the outward transport service utilized by the manufacturer beyond the place of removal would not qualify as an input service within the definition of rule 2(l). We may only notice two things in this regard. Firstly, in our view, when we find that outward transport service is covered by the main body of the definition which provides for means part, as specifically including any service directly or indirectly in or in relation to manufacture of final product or clearance of final product from the place of removal, no interpretation of the later part of the definition would permit us to exclude such a service form the sweep of the definition. Secondly, we notice that the definition of the term ‘input service’ came to be amended with effect from 1.4.08 and instead of words “clearance of final products from the place of removal”, the words “clearance of final products up to the place of removal” came to be substituted. What would be the position if the case had arisen after 1.4.08 is a situation we are not confronted with. We, therefore, refrain from making any observations in this regard. We, however, cannot help noticing the change in the statutory provisions which is at the heart of the entire controversy. In so far as the cases on hand are concerned, the statutory provisions cover the service used by the manufacturer in relation to the manufacture of the final products or even the clearance of final products from the place of removal.
22. Be that as it may, we are of the opinion that the outward transport service used by the manufactures for transportation of finished goods from the place of removal up to the premises of the purchaser is covered within the definition of “input service” provided in rule 2(l) of the Cenvat Credit Rules, 2004.”
3. In the result, Tax Appeal is dismissed.