2017 (9) TMI 1328 - AT - Service Tax

GTA service - non-payment of service tax on GTA - claim of appellant is that appellant being proprietarship concern is not a person liable for paying service tax - abatement - Specified person under Rule 2 (1) (d) (v) of Service Tax Rules in relation to services under GTA - Held that - if the consignee to be liable to pay freight, it has to be a factory registered under Factories Act, or any company established under Companies Act, or any corporation established by or under any law or any society registered under the Societies Registration Act etc. or any cooperative society established by or under any law or any dealer of excisable goods who is registered under the Central Excise Act, 1944 or the Rules made therein or any body corporate established or a partnership firm registered by or under any law - Being a proprietary concern, the appellant as a consignee of GTA services will not fall under the category of corporation, society or cooperative society. They are also not partnership firm or body corporate established by or under any law - there can be no tax liability at all on them since they will not be covered under Rule 2(1)(d)(v) of Service Tax Rules, 1994 or either in any of the guidelines listed therein in the capacity of a consignee of goods by Piaggio Vehicles (P) Ltd. - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellant, as a proprietary concern, is liable to pay tax under Rule 2 (1) (d) (v) of Service Tax Rules in relation to services under GTA.
2. If liable, whether the appellant can avail of the 75% abatement extended by Notification No. 32/2004-ST.

Analysis:

Issue 1:
The core issue revolved around determining the tax liability of the appellant, a proprietary concern, under Rule 2 (1) (d) (v) of the Service Tax Rules. The appellant contended that being a proprietary concern, they were not liable to pay service tax. The Service Tax Rules specified entities like factories, companies, corporations, societies, cooperative societies, dealers of excisable goods, or body corporates as persons liable to pay service tax in relation to services under GTA. The appellant argued that their registration under the Sales Tax authority did not make them a body corporate under any statute. The Tribunal analyzed the provisions of Rule 2 (1) (d) (v) and concluded that as a proprietary concern, the appellant did not fall under the specified categories liable to pay service tax. The Tribunal found merit in the appellant's argument that no tax liability existed on them under the mentioned rule.

Issue 2:
If the appellant were found liable for service tax, the next issue was whether they could avail the 75% abatement as per Notification No. 32/2004-ST. The Commissioner (Appeals) had denied the abatement, stating that the appellant had produced invoices/bills from the transporter and not consignment notes. The Tribunal, after examining the facts and legal provisions, found that the appellant's main plea of no tax liability was valid. Therefore, the Tribunal set aside the impugned order upholding the demand for differential tax liability on the appellant in respect of GTA services. The appeal was allowed, granting consequential benefits as per law.

In conclusion, the Tribunal ruled in favor of the appellant, holding that they were not liable to pay service tax under the specified rule and therefore set aside the demand for tax liability. The judgment provided a detailed analysis of the legal provisions and factual circumstances to arrive at its decision.