2014 (12) TMI 957 - AT - Service Tax

Waiver of pre deposit - Reimbursement of transportation charges by CHA - whether the appellant was liable to pay Service Tax on the transportation charges reimbursed by the appellant to the CHA who actually paid transportation charges to transporter without paying service tax - Held that - As per Rule 2(i)(d)(i)(B) of the Service Tax Rules, 1994, service tax on GTA services is required to be paid by the person who actually pays or is liable to pay the freight either himself or through his agent. In the present case, CHA is rendering several services to the appellant as per the invoices raised by CHA and produced at the time of arguments and one of the charges indicated in the invoices is payment of transport charges. There is no evidence on record that CHA is acting only as an agent of the appellant and that which paying freight charges to the transporter CHA was only acting as an agent. - Appellant has made out a prima facie case for complete waiver of the confirmed dues and penalties. Accordingly, it is ordered that there shall be stay on recoveries of the confirmed dues and penalties, till the disposal of the appeal - Stay granted.

Summary

Issues involved:
Whether the appellant was liable to pay Service Tax on transportation charges reimbursed to the CHA who paid the charges to the transporter without paying service tax.

Analysis:
The appeal and stay application were filed against the order under which the original order was upheld. The main issue revolved around the liability of the appellant to pay Service Tax on transportation charges reimbursed to the CHA. The appellant argued that as per Rule 2(i)(d)(i)(B) of the Service Tax Rules, 1994, the service tax on Goods Transport Agency (GTA) services should be paid by the person who pays the freight directly or through an agent. The appellant contended that since they only reimbursed the amount paid by the CHA to the transporter, the service tax liability should fall on the CHA. This argument was supported by a legal precedent cited by the appellant.

The Respondent, on the other hand, argued that the CHA paid the freight as an agent of the appellant, and since the invoices did not indicate the service tax amount separately, the liability should rest with the appellant. After hearing both sides and examining the case records, it was noted that as per the Service Tax Rules, the service tax on GTA services should be paid by the person who actually pays or is liable to pay the freight, either directly or through an agent. In this case, it was observed that the CHA provided various services to the appellant, including payment of transport charges, as mentioned in the invoices. However, there was no concrete evidence to prove that the CHA was solely acting as an agent of the appellant when paying the freight charges to the transporter.

Based on the above analysis, the appellant was deemed to have established a prima facie case for a complete waiver of the confirmed dues and penalties. Consequently, it was ordered that there would be a stay on the recovery of the confirmed dues and penalties until the appeal was disposed of. The operative portion of the order was pronounced in court, granting the stay on recoveries.