2019 (7) TMI 1803 - AT - Service Tax

Levy of Service Tax - GTA service or not - contractors for transportation of coal from pit head to railway siding within the mining area owned by it - Reverse Charge Mechanism (RCM) - HELD THAT - The service tax liability will arise only if the definition of 'taxable service' as contained in Section 65(105)(zzb) of the Act, which was in force during the material period, is fulfilled. As per the said provision, during the period in dispute, the taxable service, in relation to transport of goods in a goods carriage, means any service provided or to be provided to a customer by a goods transport agency service. We note that the term 'goods transport agency' has been specifically defined in Section 65(50b)to mean any commercial concern which provides service in relation to transport of goods by road and issues consignment note, by whatever name called - On perusal of the above statutory provisions, it is clearly evident that in order to constitute 'Goods Transport Agency', the provider of transportation service must issue the consignment notes or any other document by whatever name called. Thus, taking into consideration the essential requirement of issuance of 'consignment note', in order to attract the definition of Goods Transport Agency , it is held that the transport contractors rendering the coal transportation services in mines cannot be said to be Goods Transport Agency and therefore, their services cannot be made amendable to levy of service tax in the category of transportation of goods by road services - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
- Liability of service tax on Goods Transport Agency services for the period January 2005 to March 2006.
- Interpretation of the term 'Goods Transport Agency' and the requirement of consignment notes for taxation under the Reverse Charge Mechanism.

Analysis:
1. The appellant, a coal production PSU, engaged in transportation of coal within its mining area, appealed against the demand of service tax upheld by the Ld. Commissioner of Central Excise (Appeals). The issue revolved around whether the transportation services availed by the appellant were liable to service tax under GTA services introduced from January 2005. The department argued for tax liability under the Reverse Charge Mechanism (RCM) based on the absence of consignment notes issued by the transporting contractors.

2. The appellant contended that since no consignment notes were issued by the contractors, the services should not be classified as Goods Transport Agency (GTA) services, as defined under Section 65(50b) of the Act. The appellant highlighted the control maintained through weighment slips and delivery memos, emphasizing the absence of consignment notes. They relied on previous tribunal decisions and legal provisions exempting non-GTAs from service tax.

3. The appellant's representative referenced various tribunal decisions and legal provisions exempting non-GTAs from service tax, emphasizing the necessity of consignment notes to constitute a GTA. The appellant distinguished the Hon'ble Supreme Court's decision in a related case, stating it did not address the legal requirement of consignment notes for GTA classification.

4. The Revenue supported the lower authorities' findings, citing the Hon'ble Supreme Court's decision favoring tax liability under GTA services. The Revenue argued that the absence of consignment notes did not exempt the appellant from service tax liability, based on settled legal interpretations.

5. The Tribunal analyzed the statutory provisions and previous decisions, emphasizing the essential role of consignment notes in defining a GTA. Citing relevant tribunal decisions and legal provisions, the Tribunal held that without consignment notes, the transport contractors could not be classified as GTAs, thereby exempting the appellant from service tax liability.

6. The Tribunal's decision aligned with the legal requirement of consignment notes for GTA classification, setting aside the demand for service tax, interest, and penalty. The appeal was allowed in favor of the appellant, providing consequential relief as per law.