2015 (11) TMI 163 - AT - Service Tax

Denial of abatement of 75% - GTA service - Notification 32/2004-ST dt. 3.12.2004 - assessees engaged individual truck operator/owner for transport of granite blocks from quarry to the factory and from factory to the port of destination and paid service tax on the GTA by availing Notification 32/2004-ST - Denial on the ground that the assessees not fulfilled the condition of the notification - Held that - Exemption is not applicable if the service provider has availed input and capital goods credit for providing GTA service and they should not have availed notification 12/2003. We find that in the present case the service providers are the transport operators. On perusal of payment vouchers dt. 25.4.2005, 3.6.2005 and 26.8.2006 issued by the appellants to various individual truck owners, we find there is no document or any consignment note by the assessee. It is pertinent to state that as per GTA rules, the GTA should issue consignment notes and not the individual truck owners. In the present case, since the individual truck operator is not registered with service tax, the question of availing input credit or capital goods credit does not arise. The Board s circular dt. 27.7.2005 and 23.8.2007 are applicable to consignment agents who issue consignment notes to, transporters and they have to declare in the invoice that they have not availed any credit. In this case, transport operators who rendered GTA service to assessee are not registered with central excise or service tax. Therefore, it is evident that once the service provider is not registered with service tax, the fulfilment of condition of notification No.32/2004 does not arise. - appellant is eligible to pay service tax as a recipient and they are eligible for abatement and the appellants have rightly paid 25% service tax on the freight paid. It is pertinent to state that w.e.f 1.1.2010 both the conditions (i) & (ii) stipulated under the proviso to the said notification were deleted and the abatement is applicable without any conditions. In view of foregoing discussion, we hold that appellants are eligible for the benefit of exemption notification No.32/2004. Therefore, question of demanding differential service tax and imposition of penalty does not arise. - Decided in favour of assessee.

Summary

Issues involved:
1. Denial of abatement of 75% under Notification 32/2004 for service tax paid as a recipient of GTA service.
2. Interpretation of conditions of the notification and compliance by the appellants.
3. Liability to pay service tax by individual truck operators.
4. Applicability of abatement without conditions from 1.1.2010.
5. Implications of High Court judgments on liability for service tax.

Analysis:

Issue 1: Denial of abatement under Notification 32/2004
The appeals involved assesses registered as EOU for manufacturing and exporting granite slabs, paying service tax on GTA service for transporting granite. The dispute arose when the Department denied abatement and demanded differential service tax, alleging non-compliance with the notification's conditions. The appellants claimed they correctly paid service tax under the notification and had not violated any conditions. The Tribunal noted the history of appeals, including High Court intervention, and considered the abatement eligibility under the notification.

Issue 2: Interpretation of notification conditions
The Tribunal examined the relevant notification 32/2004, emphasizing the exemption's applicability to a goods transport agency (GTA) service. It highlighted the proviso stating the exemption does not apply if the service provider availed input or capital goods credit. The Tribunal analyzed the appellants' engagement of individual truck operators, the absence of consignment notes, and the non-registration of truck operators for service tax. It concluded that the appellants were eligible for the abatement as recipients of GTA service, despite the lack of consignment notes from individual truck operators.

Issue 3: Liability of individual truck operators for service tax
The Tribunal addressed the argument that individual truck operators were not liable for service tax, emphasizing the High Court's stance that any person availing GTA service, including individual truck operators, is liable to pay service tax. It clarified that the appellants, as recipients of GTA service, were responsible for paying service tax and were eligible for the abatement benefit.

Issue 4: Abatement applicability without conditions
The Tribunal noted the deletion of conditions (i) and (ii) from the notification effective from 1.1.2010, making abatement applicable without any restrictions. It highlighted this change in the law to support the appellants' eligibility for the abatement under Notification 32/2004.

Issue 5: High Court judgments on liability for service tax
The Tribunal considered relevant High Court judgments, such as CCE Vs Suibramania Siva Co-op Sugar Mills Ltd., supporting the liability of recipients for paying service tax on GTA service. It referenced legal precedents to establish the appellants' obligation to pay service tax and their entitlement to the abatement under the notification.

In conclusion, the Tribunal allowed the assesses' appeals, setting aside the impugned orders and rejecting the Revenue's appeals. It affirmed the appellants' eligibility for the abatement under Notification 32/2004, emphasizing their compliance as recipients of GTA service and the absence of conditions post-2010.