2014 (5) TMI 342 - AT - Service Tax

Demand of service tax on GTA service - Transporting of sugarcane - non issuance of consignment notes - Held that - appellate authority has factually accepted the fact that for transporting sugarcane from the cane sugar collection centers from the factory of the appellant, the persons providing such transportation have raised periodical bills for which the freight was paid by the appellants. - fortnightly bills cannot be held to be consignment notes, in which case transporters cannot be called goods transport agency and as such, the transportation of sugar cane from the cane sugar collection centre to the factory would not be covered by section 65(105) (zzp) - Following decision of M/s. Nandganj Sihori SugarCo. vs.CCE Lucknow 2014 (5) TMI 138 - CESTAT NEW DELHI - Decided in favour of assessee.

Summary

Issues:
Service tax liability on the appellant as recipients of transportation services.

Analysis:
The appellant, engaged in the manufacture of cane sugar and molasses, procures sugar cane from farmers delivered to a collection center, then transported to sugar mills by individual truck owners who bill for transportation fortnightly. Lower authorities initiated proceedings against the appellant for service tax liability as recipients of transportation services. The appellate authority upheld the orders, leading to the present appeals challenging the decision.

The appellate authority acknowledged that transportation bills were issued fortnightly for transporting sugarcane, but considered these bills as consignment notes, satisfying the definition of a goods transport agency. However, referencing a Tribunal decision in a similar case, it was established that fortnightly bills cannot be equated to consignment notes. The Tribunal clarified that a goods transport agency must issue consignment notes containing specific details, which were not present in the bills issued by the transporters in this case. Consequently, the Tribunal concluded that the transporters in this scenario cannot be classified as a goods transport agency, absolving the appellant from service tax liability.

In alignment with the Tribunal's decision in the referenced case, the present impugned orders were set aside, and all appeals were allowed with consequential relief to the appellants. The Tribunal's ruling emphasized the importance of consignment notes in determining the status of a goods transport agency and clarified that mere transportation bills do not fulfill the criteria outlined in the law. Therefore, the appellant was found not liable for service tax as they did not receive services from a goods transport agency based on the absence of proper consignment notes.

This judgment provides clarity on the interpretation of consignment notes in the context of service tax liability for transportation services. By following precedent and legal definitions, the Tribunal ruled in favor of the appellants, highlighting the significance of specific documentation requirements for entities to be classified as goods transport agencies.