2014 (12) TMI 831 - AT - Service Tax

Levy of service tax for transporting levy sugar - service of transportation from the GTAs service tax - Held that - Prima facie, the appellant does not have a case since the appellant is a Limited Company and they are liable to pay service tax on GTA services and no valid ground other than stating that it is statutory function has been specified. Transportation of sugar by a Limited Company cannot be considered as statutory function. Moreover, the appellant has paid entire amount of tax plus interest and only an amount of ₹ 1,16,670/- is to be paid. This amount was not paid on the ground that this was related to prior to 1.1.2005. It was pointed out by learned counsel that this amount was received only after 1.1.2005 and the claim of the appellant was that this was in respect of services rendered prior to 1.1.2005 and therefore, no liability arises is not acceptable. Prima face, the appellant does not have a case in their favour. Moreover, there is nothing left in the matter to decide at final stage. Learned counsel fairly agreed that the appellant is liable to pay service tax and will pay. As far as service tax and interest are concerned, is upheld. Penalties imposed have already been set aside - Decided partly in favour of assessee.

Summary

Issues Involved:
Levy of service tax for transporting levy sugar by a Government organization considered as a statutory function.

Analysis:
The appellant, a Government organization, was entrusted with transporting levy sugar as part of the Public Distribution System (PDS). The issue revolved around whether this transportation activity qualified as a statutory function exempt from service tax. The appellant argued that since the transportation was integral to the distribution of levy sugar, it should be considered part of its statutory function. The appellant had already paid the service tax as directed by departmental officers, but sought exemption based on the statutory nature of the function, supported by relevant circulars and notifications.

The Commissioner (Appeals) acknowledged the appellant's status as a Kerala Government Company but maintained that service tax was applicable as the appellant was registered under the Companies Act. The Commissioner did not delve into the statutory nature of the function in detail. The appellant contended that the transportation and distribution of levy sugar, as directed by the Central Government through the State Government, constituted a statutory function exempt from service tax. Despite having paid the tax and interest, the appellant requested not to deposit an additional amount, arguing that the entire function was statutory and not liable to service tax.

The Tribunal, after considering both sides and reviewing the records, concluded that the appellant, being a Limited Company, was liable to pay service tax on Goods Transport Agency (GTA) services. The Tribunal rejected the appellant's argument that the transportation of sugar was a statutory function exempt from service tax. It was noted that the appellant had paid the tax and interest, with only a specific amount remaining unpaid. The Tribunal upheld the order requiring the appellant to pay the outstanding amount, as there was no valid ground to exempt the transportation activity from service tax. The Tribunal emphasized that being a Limited Company, the appellant could not claim exemption based solely on the statutory nature of the function.

In summary, the Tribunal upheld the decision that the appellant was liable to pay service tax for transporting levy sugar, despite the appellant's arguments regarding the statutory nature of the function. The Tribunal found no merit in exempting the transportation activity from service tax solely based on the appellant's status as a Government organization. The order requiring payment of the outstanding amount was upheld, emphasizing the appellant's obligation to pay service tax on GTA services, even if the activity was part of a statutory function.