2011 (3) TMI 161 - AT - Service Tax

Demand of tax along with interest and penalty - Movement of components to railway factory - Appellant claims that components are not goods and hence movement through GTA service is libale to Service Tax - appellant also tried to claim benefit of exemption under notification no. 29/2008 - Held that Notification No. 29/2008 is not applicable to GTA service which is covered under Sub-clause zzp of Clause 105 of Section 65 of the Finance Act, 1994 - the components manufactured and transported by the appellants very much come within the definition of goods under the Finance Act, 1994, because being moveable property and satisfying the definition of goods Section 2 of Sales of Goods Act, 1930 - demand of tax with interest sustained, penalty set aside.

Summary

Issues: Condonation of delay in filing appeals, waiver of pre-deposit requirement, applicability of service tax on GTA services for transporting components, interpretation of relevant notifications and acts, exemption under Notification No. 29/2008, liability of Ministry of Railways factory for service tax, imposition of penalty.

Condonation of Delay and Waiver of Pre-deposit: The Tribunal allowed the condonation of delay in filing the appeals and waived the requirement of pre-deposit after considering the grounds presented by both parties. The appeals were taken up for hearing and disposal on the same day with the consent of both sides.

Applicability of Service Tax on GTA Services: The appellant, functioning under the Ministry of Railways, argued that the components they manufacture and transport using GTA services are not goods as they are not sold, hence not subject to service tax. However, the Tribunal held that the components fall within the definition of goods under the Finance Act, 1994, and the appellant, being registered as a factory under the Factory Act, is liable to pay service tax as the recipient of GTA services.

Interpretation of Notifications and Acts: The Tribunal clarified that the exemption under Notification No. 29/2008 does not apply to GTA services covered under Sub-clause zzp of Clause 105 of Section 65 of the Finance Act, 1994. It emphasized that the law does not differentiate between profit and government factories in terms of liability for service tax on GTA services.

Liability of Ministry of Railways Factory: Despite the Ministry of Railways factory's affiliation, the Tribunal upheld the tax demand and interest, ruling that the penalty imposed was waived considering the factory's circumstances. It noted that there is no exemption for government factories or those belonging to the Ministry of Railways from paying service tax on GTA services.

Conclusion: The appeals were partly allowed by confirming the tax demand and interest while setting aside the penalty. The Tribunal's decision highlighted the liability of the Ministry of Railways factory to pay service tax on GTA services for transporting components, emphasizing the applicability of relevant laws and notifications in determining tax obligations.