2020 (9) TMI 832 - AT - Service Tax

Reverse Charge mechanism - Liability of Service Tax - GTA Service - no consignment note issued - it appeared to Revenue that the appellants being corporate body private limited company , are liable to pay service tax on reverse charge basis - HELD THAT - The learned Commissioner (Appeals) have misconceived the provisions of law as he has considered the provision for payment of tax under reverse charge mechanism as the charging section - Admittedly, charging section does not provide for levy of service tax in case of GTA service, where no consignment note is issued. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Liability of a private limited company to pay service tax under reverse charge mechanism for transportation of marble blocks.
2. Interpretation of Rule 2(1)(d)(i)(B) of Service Tax Rules in relation to service tax liability.
3. Application of judgments from Madras High Court and Tribunal rulings in similar cases.
4. Consideration of service tax liability when no consignment note is issued.

Analysis:
1. The case involved the liability of a private limited company to pay service tax under the reverse charge mechanism for transporting marble blocks obtained from mines to their manufacturing unit using individual transporters. The Revenue contended that the company was liable to pay service tax under Section 65(105)(zzp) read with Rule 2(1)(d)(i)(B) of the Service Tax Rules, 1994.

2. The Commissioner, in the order-in-appeal, held that the company was liable to pay service tax under the reverse charge mechanism as per Rule 2(1)(d)(i)(B) of the Service Tax Rules and specified Notification No.35/2004-ST. The Commissioner relied on judgments from the Madras High Court and Tribunal rulings to support the decision, stating that the transport of goods by individual operators falls under the category of 'commercial concern' for providing services under Goods Transport Agency (GTA).

3. The appellant challenged the order, citing a Tribunal ruling in a similar case where it was held that if no consignment note was issued by the transporter, the service tax liability under the GTA service does not arise. The appellant distinguished the ruling of the Madras High Court in another case to support their argument against the service tax liability.

4. The Tribunal, after considering the arguments, found that the Commissioner had misconceived the provisions of law by considering the provision for payment of tax under the reverse charge mechanism as the charging section. It was noted that the charging section does not provide for the levy of service tax in cases where no consignment note is issued. Consequently, the appeals were allowed, the impugned order was set aside, and the appellants were entitled to consequential benefits in accordance with the law.