2015 (8) TMI 304 - AT - Service Tax

GTA services - Payment of freight - liability to discharge service tax burden is on supplier of goods or purchases to goods - Held that - The observation made by the first appellate authority does not convey that the freight has been directly paid by the appellant to the transporter. Rather the invoices produced by the appellant indicate that amount of freight has been recovered from the appellant. The verification report dated 24.10.2013 made by the jurisdictional range officer also conveyed that supplier of the material to the appellant has charged the freight in their invoices. Copy of this report has not been given to the appellant. The orders passed by the lower authorities are, therefore, in gross violation of principles of natural justice. - The appellant should produce all the documentary evidence required to be establish that the freight is not paid by them to the transporters. It is made clear that all the issues are kept open for the adjudicating authority to deliberate upon. - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
Appeal against OIA confirming demand of certain amount along with interest and penalty, challenge to demand related to freight charges, argument on liability to pay service tax on GTA services, contention on payment of freight, violation of principles of natural justice in passing lower authorities' orders.

Analysis:
The appellant filed an appeal against OIA confirming a demand of a specific amount along with interest and penalty, while setting aside a portion of the demand related to duty demand on debit notes. The appellant's representative argued that the amount in question shown as payment of freight in the balance sheet was actually charged by the supplier of goods in the invoices. It was contended that since the freight was not directly paid by the appellant to the transporters, they should not be liable to pay service tax on GTA services on a reverse charge basis. Revised balance sheets were submitted with verified information, indicating that the supplier of goods had charged the freight in the invoices. The jurisdictional range officer confirmed this but failed to provide the verification report to the appellant, leading to a violation of natural justice.

The Revenue argued that since the freight was ultimately paid by the appellant, they were obligated to pay GTA service tax even if payments were not directly made to the transporters. However, the appellate authority observed that the freight amount was recovered from the appellant based on sample invoices produced, indicating that the consignor had paid the freight when the goods were supplied on FOR destination basis. The lower authorities' orders were deemed to be in violation of natural justice principles as the appellant was not provided with the verification report. Therefore, the case was remanded back to the adjudicating authority with directions to provide a copy of the report to the appellant and decide the case afresh, allowing the appellant an opportunity for a personal hearing to present all necessary documentary evidence to establish that the freight was not paid by them to the transporters. All issues were to be reconsidered by the adjudicating authority in the remand proceedings.

The appeal was allowed by way of remand to the adjudicating authority, emphasizing the need for a fair and just reconsideration of the case with all relevant evidence and principles of natural justice upheld.