2018 (8) TMI 1806 - AT - Service Tax

Non-payment of service tax - transportation charges paid on carriage inward charges and carriage outward charges for the period from 2007-08 to 2011-12 - Reverse Charge Mechanism - HELD THAT - The service tax has been confirmed against the appellant who are availing the services on the goods transport agency during the period from 2007-08 to 2011.12. It is on record that the service tax on the said services stands paid by the transporter - It is the case of the Revenue that it was the liability of the appellant to pay the service tax under the reverse charge mechanism and the service tax paid by the transporter who provided the services, cannot be treated as a valid payment. However, the revenue has not refunded the service tax paid by the transporters to them. Central Board of Indirect Taxes and Customs vide TRU clarification Notification F No. 341/18/2004-TRU(PT) dated 17.12.2004 has clarified that if service tax due on transportation of a consignment has been paid or is payable by a person liable to pay service tax, service tax should not be charged for the same amount from any other person, to avoid double taxation. Once tax has already been paid on the services, it was not open to the Department to confirm the same against the appellant, in respect of the same services - appeal allowed - decided in favor of appellant.

Summary

Issues: Liability of service tax on transportation charges under reverse charge mechanism.

In this case, the appellant, a manufacturer of pens, was issued a Show Cause Notice for not paying service tax on transportation charges for the period from 2007-08 to 2011-12. The adjudicating authority confirmed the demand of service tax along with interest and penalties. The Ld. Commissioner (Appeals) upheld the order, leading to the appeal before the Tribunal.

The appellant argued that the service tax on Goods Transport Agency (GTA) services had been paid by the service provider under the reverse charge mechanism as per Service Tax Rules. The service providers were registered with the service tax department, charged service tax in their bills, and the appellant had paid the same to them.

The issue before the Tribunal was whether the appellant, as the recipient of GTA services, was liable to pay service tax under reverse charge mechanism when the service tax had already been paid by the service provider. The Revenue contended that the appellant was liable to pay the service tax, despite it being paid by the transporter, and had not refunded the service tax paid by the transporters.

Referring to a clarification by the Central Board of Indirect Taxes and Customs, the Tribunal held that if service tax on transportation had been paid by a person liable to pay, it should not be charged from any other person to avoid double taxation. The Tribunal concluded that since the tax had already been paid on the services by the transporter, the Department could not confirm the same demand against the appellant. Therefore, the Tribunal set aside the impugned order, allowing the appeal with consequential relief to the appellant.