2014 (2) TMI 756 - AT - Service Tax

Demand of service tax - Tax not paid on freight charges - Held that - It is seen that they discharged service tax liability on the same mode of transport exceeding Rs.1,500. Prima facie, the contention of the learned counsel that the tax is not payable as it was discharged by the individual truck operators between Rs.750 and Rs.1,500 is not acceptable. The contention of the learned counsel regarding the demand is barred by limitation would be looked into at the time of hearing of the appeal in detail. In view of the above, the applicant is directed to deposit Rs.12,00,000 within a period of six weeks and report compliance on 1.5.2013. Upon such deposit, predeposit of the balance dues stands waived and recovery stayed till the disposal of the appeal - Decided against assessee.

Summary

Issues: Tax liability on freight charges, Evidence of individual truck operators, Limitation on demand

The judgment by the Appellate Tribunal CESTAT Chennai dealt with the issue of tax liability on freight charges ranging from Rs. 750 to Rs. 1,500 incurred by a company engaged in the manufacture of sugar and molasses. The company received raw material (sugarcane) from farmers, transported by truck operators to their factory. The original authority confirmed a tax demand of Rs. 37,23,496/- along with penalties and interest for the period from January 2005 to August 2009. The Commissioner (Appeals) upheld this order.

Regarding the tax liability issue, the company argued that they paid the freight charges and recovered them from the farmers directly, contending that since there was no Goods Transport Agency involved, tax should not be levied. The company claimed that individual truck operators undertook the transportation, but the Commissioner (Appeals) noted a lack of evidence supporting this claim. The company also raised the issue of limitation on the demand.

The Appellate Tribunal considered the arguments presented. They found merit in the Commissioner (Appeals) findings that the company had indeed discharged tax on freight charges exceeding Rs. 1,500/- but had not done so for charges ranging from Rs. 750 to Rs. 1,500. The Tribunal rejected the company's argument that tax was not payable for the lower range of charges, emphasizing that the mode of transport remained the same. The Tribunal reserved the issue of limitation for detailed examination during the appeal hearing. As a result, the company was directed to deposit Rs. 12,00,000/- within six weeks, with the balance dues predeposit waived and recovery stayed pending appeal resolution.

In conclusion, the judgment clarified the tax liability on freight charges for the company, emphasizing the need for compliance with service tax regulations even for lower-range charges. The Tribunal's decision highlighted the importance of evidence and proper documentation in tax matters and reserved the issue of limitation for further review during the appeal process.