2018 (6) TMI 790 - AT - Service Tax

Classification of services - transporting Food grains under a contract - appellant submits that their activity were not only restricted to mere transportation of the goods but will also include loading and unloading of the food grains - whether the activity carried out by appellant is covered under the head GTA Service or under the head Cargo Handling Services? - Held that - The Appellant has been appointed Food grains Transport contractor for transportation of goods from one place to another. The Appellant is engaged in transportation of food grains under the PDS (Public Distribution Scheme). The goods are transported on direction of District Supply officer and are under his control. There is no consignor and consignee in such case - During the transportation stage, the Appellant does not acquire any lien on the goods which is implicit in the issue of a consignment note. The document issued by District Supply Officer conveying the goods transported cannot be construed as a consignment note to render the Appellant to be a goods transport agency. Services not covered under GTA services - demand set aside - appeal allowed - decided in favor of appellant.

Issues:
1. Whether the appellant's service falls under the category of Goods Transport Agency for the purpose of service tax liability.
2. Whether the appellant's services can be considered as "Cargo Handling Service" and be exempted from service tax.
3. Whether the document issued by the District Supply Officer can be construed as a consignment note.
4. Whether the appellant is liable to pay service tax as a goods transport agency based on the definition provided in the Finance Act, 1994.

Analysis:

1. The appellant, engaged in transporting food grains under a contract awarded by the District Supply Officer, was issued a show cause notice for service tax liability as a Goods Transport Agency. The appellant argued that their services included loading and unloading of food grains, making them eligible for exemption under "Cargo Handling Service." They also cited relevant judgments to support their claim. The Tribunal found that the appellant did not acquire any lien on the goods during transportation, as there was no consignor and consignee, thus rejecting the service tax liability as a Goods Transport Agency.

2. The appellant contended that their services should be considered as "Cargo Handling Service" and exempt from service tax under a specific notification. The Tribunal analyzed the nature of the services provided by the appellant, emphasizing the lack of consignment note issuance and the control of goods by the District Supply Officer. Relying on previous judgments and the definition of a goods transport agency, the Tribunal concluded that the appellant's services did not fall under the category of a goods transport agency, thereby dismissing the service tax liability.

3. The issue of whether the document issued by the District Supply Officer could be deemed a consignment note was crucial in determining the appellant's service tax liability. The Tribunal scrutinized the characteristics of a consignment note and the control of goods during transportation. By highlighting the absence of a consignor-consignee relationship and the lack of a consignment note, the Tribunal ruled in favor of the appellant, rejecting the service tax demand based on the document issued by the District Supply Officer.

4. The Tribunal delved into the legal definitions provided in the Finance Act, 1994 to ascertain the appellant's liability as a goods transport agency. By examining the essential characteristics of a goods transport agency and the requirement of issuing a consignment note, the Tribunal dissected the arguments presented by the revenue authority. Relying on a specific judgment and the misinterpretation of rules, the Tribunal concluded that the appellant was not liable to pay service tax as a goods transport agency, ultimately allowing the appeal and setting aside the impugned order.

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