2017 (5) TMI 1028 - AT - Service Tax

Interpretation of statute - GTA service - Reverse Charge Mechanism - demand of service tax on GTA services, where the freight paid exceeded ₹ 750/- but did not exceed ₹ 1,500/- per consignment - N/N. 34/2004-ST - The Commissioner interpreted the said notification to the effect that when the goods carriage carried only a single consignment clause (i) can be made applicable, to allow exemption - Held that - The gross amount charged on an individual consignment transported in a goods carriage is specifically mentioned in Clause (ii) of the notification - In the present case, the individual consignment transported in a single lorry had freight amount exceeding ₹ 750/-, thereby clearly attracting provisions of Clause (ii). Clause (i) will apply where the gross amount charged on consignments transporter in a goods carriage does not exceed ₹ 1,500/- - admittedly, there is no multiple consignments. We find no need to take a single consignment, with no other consignment in the same lorry, to be covered under the category of clause (i). Such interpretation will be against the plain reading and also will make the operation of the notification difficult in different situations, of individual consignments having freight of below ₹ 750/-/above ₹ 750/- and also above ₹ 1,500/- - where an assessee incurred freight upto ₹ 1500/- per consignment the assessee is not eligible for exemption. Appeal allowed - decided in favor of Revenue.

Summary

Issues:
Interpretation of Notification 34/2004-ST for exemption on service tax for consignments transported by road.

Analysis:
The case involved an appeal by the Revenue against an order of the Commissioner of Central Excise, Jaipur - II, regarding the liability of a respondent engaged in mining activities to pay service tax on Goods Transport Agency (GTA) services. The dispute arose when the respondent did not pay service tax on consignments where the freight charges did not exceed ?1,500 per consignment, claiming exemption under Notification 34/2004-ST. The Commissioner held that the respondent was eligible for exemption under the said notification, interpreting the term "consignments" to include a single consignment as well, based on the General Clauses Act, 1897.

The Revenue contended that the Commissioner erred in applying the General Clauses Act and argued that a plain reading of the exemption notification was sufficient to understand its scope. They emphasized that different situations were covered by clauses (i) and (ii) of the notification, with clause (i) applying to multiple consignments and clause (ii) to individual consignments with freight exceeding ?750. The Revenue cited a Tribunal decision to support their interpretation.

The respondent's counsel supported the Commissioner's reasoning, highlighting Notification 25/2012-ST and arguing that the scope of the present notification should apply to all earlier periods covered by Notification 34/2004-ST.

Upon hearing both sides, the Tribunal found that the Commissioner's interpretation was incorrect. The Tribunal clarified that clause (i) of the notification applied to situations where the gross amount charged on consignments transported in a goods carriage did not exceed ?1,500, whereas clause (ii) applied to individual consignments with freight not exceeding ?750. The Tribunal emphasized that different situations were envisaged, and the exemption's availability depended on the facts of each case. They also referenced a previous Tribunal decision to support their interpretation.

In conclusion, the Tribunal held that the Commissioner's order was not legally sustainable and allowed the Revenue's appeal, setting aside the Commissioner's decision.