2019 (7) TMI 917 - AT - Service Tax

Taxability - GTA Service - utilization of lorries for transportation of iron ore from their mines to the port of export at New Mangalore - HELD THAT - The tax liability will arise only upon the goods transport agency i.e., one who undertakes responsibility, in full legal sense, for the cargo despatched by it and an individual truck operator who does not accept such responsibility, is merely performing the activity of transport of goods which is not the subject of the tax. It is, of course, necessary to point out, from the history of the tax on this service, that the blanket intent to tax the operators led to widespread agitation and, conscious of the problems of implementation, the Central Government, upon reintroduction of the levy, restricted it to agencies. Also, the reference to goods consignment number in the trip sheet does not constitute the issue of goods consignment note which is essential pre-requisite for taxation of the service. The activity performed for the appellant by transporters falls outside the ambit of section 65(105)(zzp) of Finance Act, 1994 and is not taxable in their hands - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge to demand of differential tax, interest, and penalties for goods transport agency service.

Analysis:
1. The appeal contested the demand of differential tax, interest, and penalties amounting to ?92,51,572 from M/s. Lakshminarayana Mining Company for receiving 'goods transport agency service' between January 2005 and September 2006. The appellant had paid the disputed service tax amount, as per the order-in-original no. 34/2008 of Commissioner of Service Tax, Bangalore.

2. The appellant referred to a High Court decision remanding the matter back to the Tribunal after a Supreme Court direction. The Tribunal, in a previous case, had interpreted the legislative intent as non-taxability of truck owners/operators based on the Finance Minister's Budget Speech.

3. The core issue revolved around the taxability of the consideration paid by the appellant for utilizing lorries to transport 'iron ore' from mines to the export port. The appellant argued that no agency function was involved as they loaded the ore onto self-hired trucks, with no third-party involvement.

4. The Authorized Representative highlighted invoices showing service tax deductions and common consignment note numbers in trip sheets to support the taxability under section 65(105)(zzp) of the Finance Act, 1994.

5. The Tribunal examined past decisions, including those involving the taxability of individual truck owners. Referring to specific case law, it was emphasized that the tax liability falls on goods transport agencies issuing consignment notes, not individual truck operators.

6. The Tribunal clarified that taxable services are 'in relation to transport of goods by road' and not the transport itself. It emphasized that tax liability arises for agencies accepting full responsibility for cargo dispatch, not individual transporters.

7. The Tribunal concluded that the activity performed by transporters for the appellant fell outside the scope of section 65(105)(zzp) of the Finance Act, 1994, and hence was not taxable in their hands. Therefore, the impugned order was set aside, and the appeal was allowed.

This detailed analysis of the judgment showcases the legal intricacies involved in determining the taxability of goods transport agency services and the interpretation of relevant statutory provisions and case law to arrive at a final decision.