2018 (6) TMI 258 - AT - Service Tax

GTA service - reverse charge mechanism - it was alleged that appellant have not paid service tax on the transportation charges paid to harvesting contractor towards the transport of sugarcane in trucks / tractors - non-issuance of consignment note - Held that - The Appellant had awarded the work of harvesting and transportation of sugarcane to the individual persons. These individual contractors did not issue any consignment note / LR / Bilty. Thus looking to the nature of job involved and the facts that these individual contractors are not GTA, there is no reason to charge Service tax from the appellants under the category of GTA. The Tribunal judgment in case of NANDGANJ SIHORI SUGAR CO. LTD. Versus COMMISSIONER OF C. EX., LUCKNOW 2014 (5) TMI 138 - CESTAT NEW DELHI has held that When the transports did not issue consignment notes or GRs or Challans or any documents containing the particular as prescribed in Explanation to Rule 4B of the Service Tax Rules, 1994, the Transporters cannot be called Goods Transport Agency and, hence, in these cases, the service of transportation of sugarcane provided by the transporters would not be covered by Section 65(105)(zzp). Demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Applicability of service tax on transportation charges under Goods Transport Agency (GTA) under Reverse Charge Mechanism (RCM) for the period from 2011-12 to August 2012.

Analysis:
The case involved a Sugar factory accused of not paying service tax on transportation charges to harvesting contractors for transporting sugarcane. The appellant argued that the contractors were not Goods Transport Agencies (GTA) as they did not issue consignment notes. They contended that the contractors were individual truck owners responsible for harvesting and transporting sugarcane, not providing GTA services. The appellant relied on various tribunal judgments to support their claim. On the other hand, the revenue authority argued that since the services involved transportation of goods, service tax was applicable. They cited judgments to support their stance.

Upon hearing both sides, the tribunal found that the individual contractors hired by the appellant were not GTAs as they did not issue consignment notes. The tribunal referred to the definition of GTA under Section 65(50b) and emphasized the necessity of issuing consignment notes for GTA services. Since no consignment notes were issued by the contractors, the tribunal concluded that the service tax liability on the appellant, under the category of GTA, was unfounded. The tribunal's decision was influenced by the judgment in the case of NANDGANJ SIHORI SUGAR CO. LTD. where it was clarified that transportation without consignment notes did not constitute GTA services.

In light of the above analysis, the tribunal set aside the impugned order and allowed the appeal, providing consequential reliefs to the appellant. The judgment was pronounced on 25/05/2018.