2015 (7) TMI 926 - AT - Service Tax

Waiver pre deposit - GTA Service - appellants provide transportation services for the iron ore to their customers - Held that - Appellant cannot be considered either as a consignor or consignee. Therefore the Notification No. 32/2004 which requires the receiver of service to pay the tax in respect of GTA service is not applicable to them. Moreover the only observation of the Commissioner is that there is no evidence and there is no correlation between each consignment note raised by the transporter, amount received by the appellant and the tax paid by the consignee namely the service receiver. In our opinion in view of the above observations, such a requirement does not arise. Therefore prima facie appellants have made out a case for complete waiver of pre-deposit. Accordingly the requirement of pre-deposit is waived and stay against recovery is granted during the pendency of appeal. - Stay granted.

Summary

Issues:
1. Demand for service tax confirmation with interest and penalty for the period 2006-07 to 2010-11.
2. Whether the appellants are liable to pay service tax for transportation services provided.

Analysis:

1. The judgment addresses the demand for service tax amounting to &8377; 11,33,65,894/- for the period from 2006-07 to 2010-11, along with the imposition of interest and penalty on the appellant. The issue at hand revolves around the transportation services provided by the appellants for iron ore to their customers. The appellant used their own vehicles most of the time, but in cases of vehicle shortage, they hired vehicles from other transporters to facilitate the transportation of ore. Subsequently, the transporters issued consignment notes for the services provided, and the appellant invoiced the transportation charges based on pre-decided rates. The appellant received an amount exceeding the payment made to the transporters, leading to the consignee, the iron ore exporter, paying the service tax based on the consignment note and the appellant's invoice. The Department contended that the appellants failed to establish a correlation between the exported consignments, consignment notes, and the tax paid by the consignee.

2. Upon deliberation, the Tribunal determined that the appellants cannot be categorized as either a consignor or consignee in such scenarios. Consequently, the Notification No. 32/2004, which mandates the service receiver to pay tax for Goods Transport Agency (GTA) services, does not apply to the appellants. Notably, the Commissioner highlighted the absence of evidence demonstrating the correlation between each consignment note issued by the transporter, the amount received by the appellant, and the tax paid by the consignee. In light of these observations, the Tribunal deemed the requirement for such correlation unnecessary. Consequently, the appellants successfully argued for a complete waiver of the pre-deposit, leading to the Tribunal granting a stay against recovery during the pendency of the appeal.

This comprehensive analysis elucidates the legal intricacies surrounding the demand for service tax, the nature of transportation services provided by the appellants, and the Tribunal's nuanced interpretation of the applicable tax regulations in the given context.