2011 (6) TMI 493 - AT - Service Tax

Demand - The contention of the respondent is that they are manufacturer of excisable goods and on the request of their client they arranged for the transportation of their finished product they are not the agent of their client - C.B.E & C Instruction F. No. 390/Mis./163/2010-JC dated 20.10.2010 - The respondent is registered as manufacturer the respondent is also having service tax registration as a recipient of paying service tax for the inputs received in his factory - Commissioner (Appeals) has found that the place of removal is factory gate and in peculiar circumstances the respondent arranged for the transport of the final products - Commissioner (Appeals) has given clear and cogent findings the Revenue failed to submit anything contrary to the above - Appeal is dismissed

Summary

Issues:
1. Appeal against order setting aside demand for service tax and other proposals.
2. Applicability of C.B.E & C Instruction regarding filing appeals based on duty amount.
3. Liability to pay service tax on GTA service for transportation of goods.
4. Interpretation of Rule 2(v) (g) of Service Tax Rules, 1994.
5. Dispute regarding payment of service tax on freight charges.

Analysis:
1. The appeal was filed against an order setting aside the demand for service tax and other proposals by the Commissioner (Appeals). The lower adjudicating authority had confirmed a partial demand, imposed a penalty, and set aside the remaining demand. The appellant challenged this decision, leading to the current appeal by the Revenue.

2. The Counsel pointed out the C.B.E & C Instruction stating that appeals should not be filed where the duty amount, including fine and penalty, is Rs. 1 lakh and below. The appellant argued that the instruction should apply, as the amount involved in this appeal was hardly Rs. 27,802. However, the Ld. SDR contended that the instruction was not binding in this case. Eventually, the Ld. Counsel did not press the issue further.

3. The issue of liability to pay service tax on GTA service for the transportation of goods arose. The respondent, a manufacturer of excisable goods, argued that they were not liable to pay service tax as they arranged transportation for their finished products at the request of their client and were not the agent of the client. The Commissioner (Appeals) supported this argument, providing clear findings that the respondent did not fall under the defined category for service tax liability.

4. The interpretation of Rule 2(v) (g) of the Service Tax Rules, 1994 was crucial in determining the liability for service tax. The Ld. SDR argued that if the consignor or consignee fell under specified categories, the party paying the freight was liable to pay service tax. However, the respondent contended that as manufacturers of excisable goods, they were not the agent of their client and thus not liable under the rule.

5. The dispute regarding the payment of service tax on freight charges revolved around whether the respondent, who arranged transportation for their final products, was liable for the service tax. The Commissioner (Appeals) found that the place of removal was the factory gate, and the respondent arranged transport for the final products, with the freight charges later paid by the customer/consignee. The Commissioner's findings were supported by evidence from the respondent's ledger and invoices, leading to the dismissal of the Revenue's appeal.

In conclusion, the judgment upheld the Commissioner (Appeals)'s decision, dismissing the Revenue's appeal against the order setting aside the demand for service tax and penalties.