2013 (8) TMI 294 - AT - Service Tax

Goods Transport Agency u/s 65 (105) (zzp) Duty Demand Waiver of pre-deposit - Whether the service provided by the assesse comes into the category of Goods Transport Agency The assesse was a manufacturer of water storage tanks - They had taken services of individual truck owners for transportation for their final product - They had paid the freight but did not pay any service tax - Revenue was of the view that assesse should had paid service tax in terms of Rule 2 (1) (d) (v) of Service Tax Rules, 1994 wherein the service tax is to be paid by person paying freight - Held that - Service tax levy shall not be applicable to individual truck owners as such no consignment note was issued in any manner The person concerned had to be a goods transport agency within the usual meaning of the expression independent of Rule 4A A person becomes Goods Transport Agency only if he issued the consignment note - The rule says that if the person was a Goods Transport Agency, such agency had to issue consignment note waiver of pre-deposit allowed till the disposal Decided in favor of assesse.

Summary

Issues:
1. Liability to pay service tax on transportation services provided by individual truck owners.
2. Interpretation of the term "Goods Transport Agency" under Service Tax Rules, 1994.
3. Requirement of issuing a consignment note for determining tax liability.

Analysis:

Issue 1:
The applicant, a manufacturer of water storage tanks, utilized the services of individual truck owners for transportation without paying service tax. The Revenue contended that service tax should have been paid by the applicant as per Rule 2 (1) (d) (v) of Service Tax Rules, 1994. A show cause notice was issued for the period in question, resulting in a confirmed amount against the applicant, including interest and penalty.

Issue 2:
The counsel for the applicant argued that they did not engage a "goods transport agency" but only individual vehicle owners, termed as "goods transport operators." He relied on legal precedents to support the distinction, emphasizing that the tax demand was based on internal vouchers and not consignment notes. The definition of "Goods Transport Agency" under Rule 4A of the Service Tax Rules was crucial in determining the tax liability.

Issue 3:
The Revenue maintained that any entity providing services related to goods transport and issuing consignment notes falls under the definition of a "Goods Transport Agency." They cited legal decisions to support their position. The requirement to issue a consignment note, as per Rule 4B of the Service Tax Rules, was highlighted as a key factor in establishing tax liability.

The Tribunal analyzed the definition of "Goods Transport Agency" and the rule mandating the issuance of consignment notes. It was noted that a person is classified as a Goods Transport Agency only if they issue a consignment note. The Tribunal referred to the Budget Speech introducing the levy, clarifying that service tax was not intended for individual truck owners. As no consignment note was issued in this case, the Tribunal granted a waiver of pre-deposit and stayed the collection of dues during the appeal process.