2015 (12) TMI 1604 - AT - Service Tax

Levy of service tax - transportation of sugarcane from the cane collection centre to the sugar mill, initially paid by the appellant sugar mill but deducted from the price of the sugarcane payable to the farmer on the basis of an average rate - Held that - The issue herein has been squarely decided in favour of the appellant in earlier appeal between the parties in the case M/s. Nandganj Sihori Sugar Co. Versus CCE. Lucknow 2014 (5) TMI 138 - CESTAT NEW DELHI , wherein under same facts and circumstances deciding in favour of the appellant, this Tribunal held when the transporter did not issue consignment notes or GRs or challans or any documents containing the particulars, in Explanation to Rule 4B of Service Tax Rules, 1994, the transporters cannot be called Goods Transport Agency and, hence, in the appellant s case the service of transportation of sugarcane provided by the transporter would not be covered by Section 65(105)(zzp). Accordingly, this Tribunal held that there will be no service tax liability on the appellant sugar mill as they have not received the service from a Goods Transport Agency. In view of this, Tribunal set aside the orders in the earlier appeal allowing the appeal. We also take notice of the fact that under the purchase agreement and the relevant State Act, the price fixed by the State Government of Uttar Pradesh to the farmers for the purchase of sugarcane includes the cost for delivery of sugarcane by the farmer to the sugar mill. Thus, we hold that the actual recipient of the transportation service is the farmer and not the sugar mill, when admittedly transport cost has been recovered from the price of the sugarcane payable to the farmer. In view of this matter, we allow the appeal and set aside the impugned order - decided in favor of appellant-assessee.

Summary

Issues involved:
Levy of service tax on transportation of sugarcane from cane collection center to sugar mill.

Analysis:
The issue in this appeal pertains to the levy of service tax on the transportation of sugarcane from the cane collection center to the sugar mill, where the tax was initially paid by the appellant sugar mill but later deducted from the price of sugarcane payable to the farmer. The Tribunal referred to a previous appeal between the parties where it was decided in favor of the appellant. In that case, it was held that if the transporter did not issue necessary documents like consignment notes or GRs, they cannot be classified as a Goods Transport Agency. Consequently, the service of transporting sugarcane would not fall under the purview of Section 65(105)(zzp) of the Service Tax Rules, 1994. Therefore, the Tribunal ruled that there would be no service tax liability on the sugar mill as they did not receive the service from a Goods Transport Agency. The Tribunal also noted that the price fixed by the State Government of Uttar Pradesh for sugarcane purchase includes the delivery cost to the farmer, establishing that the actual recipient of the transportation service is the farmer, not the sugar mill. As the transport cost was recovered from the price payable to the farmer, the Tribunal allowed the appeal, setting aside the impugned order and granting consequential benefits to the appellant as per the law.

In conclusion, the Tribunal's decision was based on the interpretation of relevant laws and previous judgments, focusing on the absence of necessary documentation from the transporter and the ultimate recipient of the transportation service being the farmer, not the sugar mill. The ruling provided clarity on the service tax liability in this specific scenario, ultimately benefiting the appellant sugar mill by setting aside the earlier order and allowing the appeal.