2016 (10) TMI 42 - AT - Service Tax

Goods transport agency service (GTA) - non-issuance of consignment notes - Commissioner (Appeals) held that individual truck owners are not providers of goods transport agency service and relying on Commissioner of Central Excise & Customs, Guntur v. Kanaka Durga Oil Products Pvt Ltd 2009 (3) TMI 130 - CESTAT, Bangalore set aside the demand - Held that - the decision in re Kanaka Durga Oil Products Ltd prevails. We are not impressed with the grounds of appeal filed upon the authorization of the designated Committee. Revenue contends that tax is leviable under section 65(105)(zzp) of Finance Act, 1994 for providing of service by goods transport agency which is defined in section 65(50b) and that with the recipient not being one of the entities listed in rule 2(1)(d)(v) of Service Tax Rules, 1994, it is the provider of the service who is the designated person liable to pay the tax. As per definition of goods transport agency in section 65(50b) of Finance Act, 1994, an essential characteristic of provider of the service is the issuance of a consignment note. Revenue has resorted to a circular logic by claiming that rule 4B of Service Tax Rules, 2004 requires the goods transport agency to issue a consignment note. This, according to us, is a specious line of reasoning as the provider of goods transport agency service being determined by issuance of consignment note under the statute, it is not within the ambit of a subordinate legislation to create the class of taxable persons by imposing a condition that would, perforce, bring such persons within the tax net. The intent and purpose of rule 4B has been misinterpreted by the reviewing authority. During the transportation stage, the respondent does not acquire any lien on the goods which is implicit in the issue of a consignment note. Therefore, no stretch of imagination can document issued by District Supply Officer conveying the goods transported be construed as a consignment note to render the respondent to be a goods transport agency. The demand of tax therefore, fails. - Decided against the Revenue

Summary

Issues:
1. Whether the appellant is liable to pay tax as a provider of goods transport agency service.
2. Interpretation of the definition of goods transport agency under section 65(50b) of the Finance Act, 1994.
3. The applicability of rule 4B of the Service Tax Rules, 2004 in determining the liability to pay tax.
4. The impact of the decision in re Kanaka Durga Oil Products Ltd on the present case.

Analysis:

1. The appellant, M/s Fulchand Ajmera, was retained by the District Supply Office to transport food grains and goods for the public distribution system. A tax demand of &8377; 34,82,611 was confirmed by the Joint Commissioner of Central Excise, Aurangabad. The first appellate authority set aside the demand based on the argument that individual truck owners are not providers of goods transport agency service, following the decision in Commissioner of Central Excise & Customs v. Kanaka Durga Oil Products Pvt Ltd. The Revenue appealed against this decision.

2. The Tribunal noted that the decision in re Kanaka Durga Oil Products Ltd prevails, excluding individual truck owners from the tax liability under section 65(105)(zzp) of the Finance Act, 1994. The definition of goods transport agency under section 65(50b) requires the issuance of a consignment note, which was a key factor in determining the liability to pay tax. The Tribunal criticized the Revenue's argument that rule 4B of the Service Tax Rules, 2004 necessitates the issuance of a consignment note, stating that such interpretation misinterprets the intent and purpose of the rule.

3. The Tribunal further analyzed the nature of the goods transported by the District Supply Officer for the public distribution system. It highlighted that until the goods reach the intended beneficiaries, they remain in the possession of the District Supply Officer, and the transporters do not acquire any lien on the goods. Therefore, the Tribunal concluded that the documents issued by the District Supply Officer cannot be considered as consignment notes, and the appellant cannot be classified as a goods transport agency liable to pay tax.

4. Ultimately, the Tribunal rejected the appeal, finding it lacking in merit based on the interpretation of relevant legal provisions and the specific circumstances of the case. The cross-objection was also disposed of accordingly.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's reasoning in arriving at its decision.