2011 (7) TMI 679 - AT - Service Tax

Demand - GTA services - Notification No. 5/99 dated 28.02.99 - Held that in this case a show-cause notice has been issued on 12.11.2002 for the period 16.11.1997 to 01.06.98. In case of Laghu Udyog Bharati v. Union of India (1999 -TMI - 18 - SUPREME COURT OF INDIA) the Hon ble Supreme Court held that Rule 2(1)(d)(xvii) making the customer of the goods transport operator as responsible for collecting the service tax was ultra vires the Act - Decided in favor of the assessee

Summary

Issues: Appeal against demand on service tax for transportation charges paid to Goods Transport Operator.

Analysis:
1. Adjudication Order Confirmation: The case involved a show-cause notice issued to the respondent for not paying service tax on goods transportation charges to the transporter. The adjudication order confirmed the demand, which was later set aside by the Commissioner (Appeals), leading to the Revenue appealing against this decision.

2. Legal Interpretation of Notifications: The Revenue argued that the Commissioner (Appeals) erred in dropping the demand based on Notification No. 43/97, which was rescinded by Notification No. 5/99. The Revenue contended that the exemption from service tax on goods transport operator services was not applicable to persons with a turnover below Rs.50 lakhs, contrary to the Commissioner's interpretation. The Revenue also highlighted the inapplicability of a case law cited by the Commissioner (Appeals) to the present case.

3. Judicial Precedents: The Tribunal referred to the case of Laghu Udyog Bharati v. Union of India, where the Supreme Court held that the rule making the customer responsible for collecting service tax from the goods transport operator was ultra vires the Act. Additionally, the Tribunal cited the case of Agauta Sugar & Chemicals vs. CCE Noida, where it was held that a show-cause notice similar to the one in this case was not sustainable.

4. Decision: After considering the arguments and legal precedents, the Tribunal found no merit in the Revenue's appeal. The Tribunal dismissed the appeal and upheld the impugned order, emphasizing that the show-cause notice issued was not sustainable in light of the legal principles established by the Supreme Court and the Tribunal's previous decisions.

Conclusion: The judgment by the Appellate Tribunal CESTAT, Mumbai, in this case, provides a detailed analysis of the issues related to the demand for service tax on transportation charges paid to a Goods Transport Operator. The decision highlights the importance of legal interpretations of notifications, judicial precedents, and the application of relevant case laws in determining the sustainability of a demand.