2017 (11) TMI 656 - AT - Service Tax

GTA Service - transportation of sugarcane from collection centres to the factory - Revenue made out a case that as the recipient of services for transportation of sugarcane from collection centres to the factory, the Appellant was liable to pay service tax on the amounts paid to the transporters - Held that - the definition of Goods Transport Agency under Section 65(50b) of Finance Act, 1994 and provision of Rule 4A of Service Tax Rules are logically inconsistent. The entry in the Act defines Goods Transport Agency as one which issues consignment notes and thereafter Rule 4B says that Goods Transport Agency have to issue consignment note. So which criteria have to be satisfied first is not clear. That is to say if a goods transport operator does not issue consignment note he does not come within the meaning of Goods Transport Service and then the requirement under Rule 4B also is not enforceable. The provisions of Service Tax are not attracted in the transaction involved, as the appellant have only acted as a facilitator for the farmer for quick and speedy transport of sugarcane to the factory to ensure more effective recovery of sugar. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Liability of the appellant to pay service tax on transportation charges for sugarcane.
2. Interpretation of the definition of "Goods Transport Agency" under Section 65(50b) of Finance Act, 1994.
3. Applicability of Rule 4B of Service Tax Rules, 1994 in the context of transportation services.
4. The impact of the ruling of the Hon’ble Supreme Court in the case of Indian National Ship Owners Association on the present case.

Analysis:
1. The appellant, engaged in the manufacture of VP sugar and molasses, collected sugarcane from farmers and engaged individual farmers for transportation to the factory, paying charges for the service. The Revenue contended that the appellant was liable to pay service tax on these transportation services. Show Cause Notices were issued for two periods, and amounts were confirmed along with interest and penalties. The Commissioner (Appeals) waived some penalties but confirmed others. The appellant appealed against this decision, seeking relief from service tax liability.

2. The appellant argued that the truck owners transporting sugarcane were not "Goods Transport Agency" as defined under Section 65(50b) of the Finance Act, 1994, as they did not issue consignment notes. The appellant claimed that since the sugarcane was already their property, no consignment note was required for transportation. The Revenue disagreed, stating that all transporters must issue consignment notes as per Rule 4B of the Service Tax Rules, 1994. They argued that the truck owners should be treated the same as any other truck owners.

3. The Tribunal analyzed the definitions and provisions cited by both parties. They noted a logical inconsistency between the definition of "Goods Transport Agency" and Rule 4B, as it was unclear which criteria had to be satisfied first. The Tribunal found that the appellant acted as a facilitator for quick transportation of sugarcane to ensure effective recovery of sugar, rather than a typical goods transport service. They also referenced a Supreme Court ruling stating that prior to a specific date, there could be no levy of tax on a reverse charge basis.

4. Considering the arguments and legal precedents, the Tribunal allowed the appeal and set aside the impugned order, ruling in favor of the appellant. The judgment highlighted the specific circumstances of the case, the interpretation of relevant legal provisions, and the applicability of past judicial decisions on the taxation of transportation services.