2014 (7) TMI 495 - AT - Service Tax

Waiver of pre-deposit - GTA services - transportation, insurance, installation, commissioning and conducting guarantee tests service - Held that - Appellant entered into a contract with M/s.NTPC, which is a composite contract and one of the services to be provided by the appellant is GTA service for transportation of the goods from port to the premises of NTPC. The appellant, instead of undertaking the said services themselves further engaged M/s.Lee & Muirhead Pvt. Ltd. for doing the job. M/s. Lee & Muirhead Pvt. Ltd. further engaged a actual transporter for transporting the goods. The consignments notes issued by the actual transporter clearly reveal that the consignee of the goods is M/s.NTPC. Admittedly, the appellant has not provided any such GTA service nor received any GTA service either from M/s.Lee & Muirhead Pvt. Ltd. or from the actual transporter. The service actually stands provided by the ultimate transporter, M/s. ESSEMM Logistics, Vizag to NTPC. It is the NTPC who is liable to pay freight to the service provider and it actually stands paid by NTPC to M/s. ESSEMM Logistics, Vizag, may be through the appellant and through M/s. Lee & Muirhead Pvt. Ltd. In such a situation, it has to be prima facie held that the appellant as also M/s. Lee & Muirhead Pvt. Ltd. were also facilitating the transportation of the cargo, or were acting as an controlling agent for getting the work of transportation done. The appellant having neither actually provided GTA services nor having received the same, cannot be, in our prima facie view, called upon to pay any service tax liability as recipient of the GTA services - Stay granted.

Summary

Issues:
Service tax liability confirmation, imposition of penalties under Section 78 of the Finance Act, 1994, nature of the contract, sub-contracting, GTA services, recipient of services, transportation of goods, liability to pay freight, prima facie case for service tax liability.

Service Tax Liability Confirmation and Penalties:
The Commissioner confirmed a service tax liability of Rs. 2,25,22,825 along with penalties under Section 78 of the Finance Act, 1994. The appellant had a contract with NTPC for various services, including transportation of goods. The appellant subcontracted the GTA part to another company, which further engaged an actual transporter for the job. The consignment notes indicated NTPC as the consignee. The Revenue argued that the appellant received GTA services as they paid freight to the subcontractor. However, the Tribunal found that the appellant did not provide or receive GTA services directly, and NTPC was liable to pay freight to the actual transporter. Thus, the appellant could not be considered the recipient of GTA services and was not liable for service tax.

Nature of the Contract and Sub-Contracting:
The contract between the appellant and NTPC was a composite one covering various services, including transportation. The appellant sub-contracted the GTA part to another company, which then engaged an actual transporter. The consignment notes and delivery documents clearly showed NTPC as the consignee. Despite the subcontracting, the Tribunal found that the appellant did not provide or receive GTA services directly, as the ultimate transportation was done by the actual transporter for NTPC. This arrangement did not make the appellant liable for service tax as the recipient of GTA services.

Liability to Pay Freight and Prima Facie Case:
The Revenue contended that the appellant, by paying freight to the subcontractor, became the recipient of GTA services. However, the Tribunal noted that NTPC was the entity liable to pay freight to the actual transporter, which was done through the subcontractor. As the appellant did not directly provide or receive GTA services, they could not be held liable for service tax. The Tribunal found that the appellant had a prima facie case in their favor and allowed the stay petition unconditionally, ruling in favor of the appellant based on the facts and contractual arrangements presented during the proceedings.