2018 (8) TMI 1587 - AT - Service Tax

Liability of service tax - GTA Services - appellant issuing debit notes and paying freight - Held that - The appellant has entered into an agreement with the sugarcane growers and for transportation of sugarcanes from the field, as a measure of convenience the appellant arranged trucks for such transportation. The freight was also paid by the appellant. It is also seen from the record that for such consignments the appellant has assumed the role of the GTA and issued the consignment notes . In terms of the Notification No. 32/2004-ST, the liability for payment of tax is cast on the person who is paying the freight. Since the appellant is paid the freight, the service tax liability has also been taken over by the appellant. It is seen that the service tax liability has been discharged only in respect of the consignments where the gross amounts charged was beyond the limits specified in the Notification No. 34/2004-ST - the appellant will also be entitled to the benefit of Notification No. 34/2004 wherever the gross amount charged is within the limit specified therein. Appeal allowed - decided in favor of appellant.

Summary

Issues: Challenge to OIA No. 21/2011-ST (SLM) dated 18.03.2011 regarding service tax liability under Notification No. 34/2004-ST.

Analysis:
The appellant, a sugar manufacturer, arranged for truck transport of sugarcane from growers to the factory, issuing consignment notes as a Goods Transport Agency (GTA) and paying freight amounts exceeding ?1,500 per consignment. Service tax was paid and availed as input tax credit. For consignments below ?1,500, the appellant claimed benefit under Notification No. 34/2004-ST. However, the Revenue disputed this, demanding service tax without abatement. The lower authorities upheld the demand, imposing penalties. The appellant contended that even if tax was paid, it would be available as input tax credit, ensuring revenue neutrality. The appellant argued entitlement to Notification No. 34/2004 benefit for consignments within specified limits.

The Tribunal observed the appellant's arrangement with sugarcane growers, assuming GTA role, paying freight, and issuing consignment notes. As per Notification No. 32/2004-ST, the person paying freight bears tax liability. Since the appellant paid freight, they assumed service tax liability. Tax was paid only for consignments exceeding limits in Notification No. 34/2004-ST. The Tribunal held that the appellant, acting as GTA, was entitled to Notification No. 34/2004 benefit for consignments within specified limits, ensuring revenue neutrality. Citing precedent, the Tribunal noted that service tax paid would be available as input tax credit. Relying on the principle established in a Supreme Court case, the Tribunal concluded that no duty was payable if available as Cenvat credit to the same assessee. Consequently, the demand for service tax by lower authorities was deemed unsustainable. The impugned order was set aside, and the appeal was allowed.