2017 (3) TMI 1786 - HC - Service Tax

GTA service - Person liable to pay the service tax - Cooperative Societies - Whether the person specified under rule 2(1)(d)(v) of the Service Tax Rules, 1994 read with Section 65(50b) of Finance Act, 1994 are liable to pay service tax or not? HELD THAT - A Goods Transport Agency, i.e., a person who provided service in relation to transport of goods by road and issues consignment note (by whatever name called) when render such service to any cooperative society established by or under any law; or company formed or registered under the Companies Act, 1956; or any body corporate established by or under any law; (or other category or persons detailed in Clause (v) of Rule 2(d), which we do not find applicable in the case in hand), would be liable to pay service tax. In the present case, transporters transferring sugarcane from Cane Collection Centers to sugar mills and presenting bills for such service, squarely satisfy the requirement of Rule 2(d)(v) read with Section 65(50b) of Finance Act, 1994 - the transporters in the present case are clearly covered by the definition of Goods Transport Agency hence Assessees are liable to pay service tax being within the definition of person liable to pay service tax under Rule 2(d)(v). Mere fact that it is difficult to ascertain how much freight was paid for consignment by Assessee would also not be of any help in the case in hand since that is not a reason for an otherwise applicability of aforesaid provisions to the facts of the case in hand. Appeal allowed - decided in favor of assessee.

Summary

Issues:
1. Interpretation of the term "person liable for paying service tax" under Rule 2(d)(v) of the Service Tax Rules, 1994.
2. Whether the appellants are liable to pay service tax for transportation services provided by goods transport agencies.

Analysis:
1. The appeal raised a substantial question of law regarding the liability of a "person" under Rule 2(d)(v) of the Service Tax Rules, 1994, read with Section 65(50b) of the Finance Act, 1994. The dispute arose from the transportation of sugarcane by individual truck owners to sugar mills, with the Central Excise authorities contending that the appellants, as recipients of transportation services, were liable to pay service tax. The issue centered around whether the appellants, being cooperative societies, fell under the definition of "person liable for paying service tax" for services provided by goods transport agencies.

2. The case involved show cause notices issued to the appellants, demanding payment of service tax for transportation services. The adjudicating authority confirmed the demands, leading to appeals before the Commissioner of Central Excise, which were subsequently dismissed. The Tribunal, however, allowed the appeals based on precedents from the Delhi Tribunal and the Allahabad Tribunal. The High Court examined the relevant provisions and previous judgments to determine the liability of the appellants for service tax on transportation services.

3. The High Court referred to the definition of "goods transport agency" under Section 65(50b) of the Finance Act, 1994, and the definition of "person liable for paying service tax" under Rule 2(d)(v) of the Service Tax Rules, 1994. It noted the insertion of clauses (vi) and (vii) in Rule 2(d) through subsequent amendments, emphasizing the scope of liability for service tax. The Court highlighted that a person providing transport services to entities specified in Rule 2(d)(v) is liable to pay service tax, including cooperative societies like the appellants.

4. The Court analyzed the applicability of the provisions to the present case, asserting that the transporters transferring sugarcane to sugar mills met the criteria of a "Goods Transport Agency." It emphasized that the transporters issuing bills for their services fell within the definition of "person liable for paying service tax" under Rule 2(d)(v). The Court rejected the Tribunal's reasoning that transporters had not issued consignment notes, clarifying that any document serving a similar purpose would suffice. Consequently, the Court ruled in favor of the appellants, setting aside the Tribunal's judgment and allowing the appeal.

5. In conclusion, the High Court held that the appellants were liable to pay service tax for transportation services provided by goods transport agencies, as they fell within the definition of "person liable for paying service tax" under Rule 2(d)(v) of the Service Tax Rules, 1994. The Court's decision was based on a thorough analysis of the relevant legal provisions and precedents, emphasizing the broad scope of liability for service tax in such transactions.