2018 (6) TMI 387 - AT - Service Tax

SEZ unit - GTA Service - the goods are sold by the appellant in Domestic Tariff Area (DTA). The appellant only kept the goods transported to the DTA buyers after charging certain freight amount - Case of Revenue is that appellant have been engaged in providing the services of transport of goods by road to their customers at the time of removal of their finished goods in DTA - Whether the appellant can be called as the goods transport agency as defined under Section 50 (b) of Section 65 of the Finance Act, 1994 or not? - Held that - To be called Goods Transport Agency a person should fulfil two conditions, namely, he should provide service in relation to transport of goods by road and secondly should issue consignment note, by whatever name called. In this present case, admittedly, no consignment note was issued by the goods transporter. The slip issued by the appellant as recipient of service is taken by the adjudicating authority with such activity of transport to bring in tax liability. Such an attempt is beyond the scope of law. In cases where admittedly no consignment notes have been issued, the said transporter cannot be called Goods Transport Agency - the appellant do not fall under the definition of Goods Transport Agency, whose services are taxable in view of Section 65 (zzb) of the Finance Act. Scope of SCN - Held that - In the present case perusal of show cause notice dated 05.04.2011 shows that the appellant has been fastened with the liability of Service Tax on the presumption of it being GTA. The show cause notice is absolutely silent about the appellant to not to be entitled for any exemption under Special Economic Zone Act, 2005 - Keeping in view that the show cause notice is the foundation of demand, the proceedings on the lines contrary to the allegations therein deserves rejection. The appellant being a unit in special economic zone shall be entitled for exemption in furtherance of Section 26 (1) (e) read with Section 26 (2) of SEZ Act and read with Rule 31 of SEZ Rules, 2006. Whether SCN is time barred? - Held that - The SCN dated 05.04.2011 has been issued to the appellant calling him upon to discharge the service tax liability for the period from October 2005 to September, 2008. The entire demand is beyond the normal period of limitation of one year and as such being barred by limitation of such proviso to Section 73 (1) of Finance Act, 1994 is applicable to the present case. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Classification of the appellant as a Goods Transport Agency (GTA).
2. Scope of the order under challenge vis-à-vis the show cause notice.
3. Applicability of exemptions under the Special Economic Zone (SEZ) Act, 2005.
4. Limitation period for issuing the show cause notice.

Detailed Analysis:

1. Classification of the appellant as a Goods Transport Agency (GTA):
The appellant argued that they were wrongly classified as a Goods Transport Agency (GTA) under Section 50B of the Finance Act, 1994. According to the appellant, they did not issue consignment notes, a requirement for being classified as a GTA. The Tribunal reviewed definitions under the Finance Act and concluded that to be classified as a GTA, a person must provide transport services by road and issue consignment notes. Since the appellant did not issue consignment notes, they did not meet the criteria for being classified as a GTA. The Tribunal supported this conclusion by referencing previous decisions, including Nandganj Sihori Sugar Co. Ltd. vs. C.C.E., Lucknow and Northern Coalfields Limited vs. C.C.E., Bhopal, which held that the absence of consignment notes precluded classification as a GTA.

2. Scope of the order under challenge vis-à-vis the show cause notice:
The appellant contended that the findings of the Commissioner (Appeals) went beyond the scope of the show cause notice. The Tribunal agreed, noting that the show cause notice focused on the appellant's classification as a GTA and did not address exemptions under the SEZ Act, 2005. The Tribunal cited the Supreme Court's rulings in Commissioner of Customs Mumbai vs. Toyo Engineering India Limited and Commissioner of Customs and Central Excise and Customs, Surat vs. Sun Pharmaceuticals Industries Ltd., which held that authorities cannot go beyond the grounds specified in the show cause notice. Consequently, the Tribunal found that the order under challenge had improperly expanded the scope of the original notice.

3. Applicability of exemptions under the Special Economic Zone (SEZ) Act, 2005:
The appellant argued that as a unit in a Special Economic Zone (SEZ), they were entitled to exemptions from service tax under Section 26(e) of the SEZ Act, 2005. The Tribunal reviewed the relevant provisions and concluded that the SEZ Act and SEZ Rules provided for such exemptions. The Tribunal found that the Commissioner (Appeals) had incorrectly adjudicated the matter by invoking SEZ Act provisions that were not mentioned in the show cause notice and by misinterpreting the conditions under which the exemptions applied. The Tribunal emphasized that the SEZ Act had an overriding effect over other laws, including the Finance Act, 1994, and that the appellant was entitled to the exemptions provided under the SEZ Act.

4. Limitation period for issuing the show cause notice:
The appellant argued that the show cause notice issued on 05.04.2011 was time-barred as it pertained to the period from October 2005 to September 2008. The Tribunal agreed, noting that the normal limitation period for issuing such notices was one year. The Tribunal found that the Department was aware of the appellant's tax situation as early as 2008, yet failed to issue the notice within the prescribed period. The Tribunal referenced the Supreme Court's decision in Pushpam Pharmaceutical Co. Vs. CCE, Bombay, which supported the appellant's argument that the notice was time-barred.

Conclusion:
The Tribunal concluded that the appellant was not liable for service tax as a GTA, the order under challenge went beyond the scope of the show cause notice, the appellant was entitled to exemptions under the SEZ Act, and the show cause notice was time-barred. Consequently, the Tribunal allowed the appeal and ordered the refund of ?9,95,000/- to the appellant. The Department was instructed to comply with the refund order within the stipulated time.