2019 (7) TMI 260 - AT - Service Tax

Recovery of Service tax - appellants are registered for providing the services under the category of Authorised Service Station - GTA Service - non-payment of service tax - reverse charge mechanism - HELD THAT - The liability to pay the service tax under reversed charged mechanism arises only when the services are received from the goods transport agency that to when such agency has issued a consignment note - In the present case, admittedly and apparently, there is no consignment note. The liability has been confirmed on the basis of mention of charges being paid by the appellant as freight as per their balance sheet - No question arises for considering as to whether mere payment of freight to a transporter amounts to receiving a goods transport agency service when the aforesaid definition clearly specifies that such service has to be received from a transport agency only and not merely from the transporter. The issuance of consignment note is also mandatory for the purpose. Mere payment of freight to a transporter who is otherwise not an agency does not amount to receiving goods transport agency services. Accordingly, the appellant cannot be made liable under reversed charged mechanism to pay the service tax for receiving the transportation services - liability under reversed charged mechanism for receiving the GTA services by the appellant has wrongly been confirmed by the Adjudicating Authority - demand set aside. Renting of immovable property services - HELD THAT - The period in demand admittedly is with effect from 2005-06 to 2009-10. The Adjudicating Authority below committed no error while dropping this demand for the period prior to year 2007 as this service was brought into the tax net vide a Notification of the year 2007. With respect to the remaining period the demand has been challenged for the Show Cause Notice being barred by time. Though the appellants were liable to pay service tax for rendering the services of Renting of immovable property but because of the prevalent confusion, no malafide can be attributed to the appellants for not paying the same during the relevant period. Accordingly, the Department has committed an error while permitting the invokablity of extended period for time for issuance of the Show Cause Notice for the period 2005-06 to 2009-10 on 19th May, 2011 - However, this demand for the period with effect from May, 2009 till 2010 is sustainable as a liability of the appellant. The appellant has already deposit the ₹ 30,628/-, accordingly, order for adjustment for appropriation of the said amount for the said liability for the year 2009-10. Penalty - HELD THAT - There was no reason for the Department to impose penalty on the appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Liability under reverse charge mechanism for receiving GTA services.
2. Liability for providing 'Renting of immovable property services'.

Analysis:

Issue 1: Liability under reverse charge mechanism for receiving GTA services
The appellant appealed against the Order-in-Appeal confirming a demand for service tax for the period 2005-06 to 2009-10, specifically related to Goods Transport Agency (GTA) services. The appellant argued that they should not be liable under the reverse charge mechanism for GTA services as no consignment note was issued by a goods transport agency. The Tribunal analyzed the definition of a goods transport agency and the requirement of a consignment note. It was concluded that the liability to pay service tax under reverse charge arises only when services are received from a goods transport agency issuing a consignment note. As no consignment note was issued in this case, the liability under reverse charge mechanism was set aside, citing relevant case law.

Issue 2: Liability for providing 'Renting of immovable property services'
Regarding the liability for 'Renting of immovable property services' from 2005-06 to 2009-10, confusion existed due to changes in tax regulations introduced in 2007 and subsequent amendments. The Department invoked the extended period of limitation for issuing a Show Cause Notice in 2011. However, the Tribunal found that the confusion prevailing during the relevant period did not indicate malafide intent on the part of the appellant. Citing relevant case law, it was held that the Department erred in invoking the extended period of limitation. The demand for the period up to May 2009 was deemed unsustainable, but the liability for 2009-10 was upheld. The Tribunal also noted a partial deposit made by the appellant, adjusting it towards the liability for 2009-10. The imposition of a penalty was deemed unwarranted, resulting in the appeal being partly allowed with consequential benefits.

This detailed analysis of the judgment highlights the issues of liability under reverse charge mechanism for GTA services and 'Renting of immovable property services', along with the Tribunal's reasoning and conclusions for each issue.