2017 (4) TMI 1226 - AT - Service Tax

GTA services - reverse charge mechanism - failure to pay tax during the period 01.01.2005 to 31.03.2008 - Held that - the goods transport service availed by the appellant is not conforming to the definition of GTA service for the purpose of payment of service tax by the appellant under reverse charge mechanism - in an identical situation this Tribunal in the case of Nanganj Sihori Sugar Co. Ltd. 2014 (5) TMI 138 - CESTAT NEW DELHI has held that service tax demand cannot be confirmed under GTA service - appeal allowed - decided in favor of appellant.

Summary

Issues:
Service tax liability on GTA Services for transportation of goods under reverse charge mechanism.

Analysis:
The appeal was filed against the order confirming a service tax demand of ?1,01,00,930 against the appellant for not paying service tax on GTA Services for transportation of goods under reverse charge mechanism from 01.01.2005 to 31.03.2008. The appellant, engaged in sugar manufacturing, argued that since petty transporters did not issue consignment notes and were not "goods transport agents," the service tax liability should not apply. The Revenue contended that since transportation charges were paid, service tax was required. The Tribunal found that the appellant's transportation activities were not in line with the definition of GTA service for service tax payment under reverse charge mechanism. The Tribunal referred to a previous decision where it was held that service tax demand cannot be confirmed under GTA service.

The Tribunal highlighted the legal provisions related to taxable services provided by Goods Transport Agencies (GTAs) in relation to transport of goods by road in a goods carriage. It was noted that GTAs must issue consignment notes containing specific details. In this case, no consignment notes were issued by the transporters, and fortnightly bills were not equivalent to consignment notes. The Tribunal emphasized that mere transportation of goods in a motor vehicle does not constitute the service provided by a GTA. As consignment notes were not issued as required by law, the transporters could not be considered GTAs. Therefore, the service of transporting sugarcane by the transporters did not fall under the taxable service category. Consequently, the Tribunal held that there was no service tax liability on the appellant sugarcane mills. The impugned orders were set aside, and the appeals filed by the appellants were allowed. The Revenue's appeal was dismissed due to the absence of service tax liability for the appellants.

In conclusion, the Tribunal found no merits in the impugned order and allowed the appeal in favor of the appellant, ruling that there was no service tax liability on the appellant sugarcane mills for transportation services provided by the transporters who did not issue consignment notes as required by law.