2009 (3) TMI 154 - AT - Service Tax

GTA service - Exemption notification 32/2004 held that - the liability to pay tax in certain cases has been shifted to either the consignor or to the consignee depending upon who actually paid the freight. In other cases where neither the consignee nor consignor is required to pay the service tax, the responsibility for paying service tax continues with .the concerned Goods Transport Agency. The condition of not taking credit of duty paid on inputs of capital goods used for providing such taxable service necessarily should relate to the services actually rendered by the Transport Agency. The respondent has not actually rendered the said services; as a consignor he has not availed the credit of duty paid on inputs of capital goods for providing such taxable services; the respondent merely paid the tax which, in the normal course, should have been paid by the transport agency - Commissioner s order denying the benefit of the Notification to the appellant is not correct. The appellants are rightly entitled for the benefit of the notification in terms of even the Board s circular

Summary

Issues:
- Interpretation of Notification No. 32/2004-ST regarding service tax liability for road transport services
- Eligibility of the appellants for abatement under the notification
- Consideration of case law and circulars in determining service tax liability

Analysis:

Interpretation of Notification No. 32/2004-ST:
The appeal was filed against an adjudication order regarding the appellants' liability to discharge service tax for road transport services. The dispute arose as the Revenue contended that the appellants were not a Goods Transport Agency (GTA) and thus not eligible for the exemption under Notification No. 32/2004-ST. The Commissioner confirmed the differential service tax, citing non-fulfillment of conditions specified in the notification. However, penalties under Sections 75 & 78 were dropped. The appellants challenged the order stating that the Commissioner's decision was based on a point not raised in the show cause notice, which should render it invalid.

Eligibility for Abatement under Notification:
The appellants argued that they were entitled to the abatement under Notification No. 32/2004-ST as recipients of the service, even though they were not a GTA. They highlighted that as a factory registered under the Factories Act, 1948, they were liable to pay service tax as per Service Tax Rules. The Tribunal referenced a similar case to support the appellants' position, emphasizing that the liability to pay tax in certain cases could shift to the consignor or consignee based on who paid the freight. The Tribunal concluded that the appellants were entitled to the benefit of the notification and set aside the impugned order.

Consideration of Case Law and Circulars:
The Tribunal considered various case laws and circulars in reaching its decision. It noted the relevance of Board's Circulars and previous judgments, such as the case of M/s. Tuticorin Alkali Chemical & Fertilizers Vs. CCE, in supporting the appellants' claim for abatement under the notification. The Tribunal emphasized that the appellants, as recipients of the service, were rightly entitled to the benefit of the notification as per legal provisions and circulars issued by the Board. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.

This detailed analysis of the judgment highlights the key issues, legal interpretations, and precedents considered in the case, leading to the final decision by the Appellate Tribunal CESTAT, Bangalore.