2022 (6) TMI 914 - AT - Service Tax

Classification of Services - recipient of GTA services or not - whether Respondent can be treated as service recipient of the GTA services as the same was on account of the farmers and only payment was made by the Respondent as the price was fixed upto delivery to the Respondent s factory? - HELD THAT - The issue whether the Respondents can be termed recipient of GTA services in such cases has been decided by the Tribunal in the case of M/S. NANDGANJ SIHORI SUGAR CO. VERSUS CCE. LUCKNOW 2014 (5) TMI 138 - CESTAT NEW DELHI where it was held that there will be no Service Tax liability on the appellant sugarcane mills, as they have not received the service from a Goods Transport Agency. In the instant case also the Respondent have pleaded that there was no issuance of any consignment notes by the transporters and they cannot be stated to have received GTA services to attract Service Tax liability on RCM basis. The said plea was also taken by the Respondent in their reply to the Show Cause Notice. However the Ld. Adjudicating authority has decided the matter on the ground that the Respondent cannot be stated to be the recipient of transport services. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Whether the Respondent can be considered the recipient of GTA services for service tax liability on RCM basis.
2. Interpretation of relevant provisions under the Service Tax Act, 1994 regarding Goods Transport Agency services.
3. Comparison of the present case with the precedent set in NANDGANJ SIHORI SUGAR CO. LTD. case.

Analysis:

Issue 1:
The case involved determining whether the Respondent, a sugar mill receiving sugar cane harvest from farmers using transport services, should be considered the recipient of GTA services for service tax liability. The Respondent made payments to transporters from amounts adjusted against the price of sugarcane payable to suppliers/farmers. The Adjudicating authority initially dropped the demand for service tax, stating that the Respondent's payments were not for GTA services. The Tribunal reviewed the case and found that the Respondent's plea of non-issuance of consignment notes by transporters supported their argument of not being the recipient of transport services. Consequently, the Tribunal dismissed the department's appeal, upholding the decision that the Respondent was not liable for service tax as a recipient of GTA services.

Issue 2:
The Tribunal referred to the definition of taxable service under Section 65(105)(zzp) of the Service Tax Act, 1994, which includes services provided by a Goods Transport Agency (GTA) in relation to goods transport by road. The interpretation of key terms such as "Goods Carriage," "Goods Transport Agency," and "Consignment Note" was crucial in determining the applicability of service tax. The absence of consignment notes, as required under Rule 4B of the Service Tax Rules, played a significant role in the Tribunal's decision. It was highlighted that mere transportation without proper documentation did not constitute GTA services, leading to the conclusion that the Respondent was not a recipient of such services.

Issue 3:
The Tribunal cited the precedent set in the case of NANDGANJ SIHORI SUGAR CO. LTD. to support its decision. In the referenced case, a similar situation arose where the appellant's liability for service tax as a recipient of GTA services was contested. The Tribunal's analysis in the previous case, emphasizing the necessity of consignment notes and specific documentation for identifying GTA services, was instrumental in guiding the decision in the present case. By aligning the current scenario with the established legal interpretation, the Tribunal reinforced its ruling that the Respondent could not be deemed the recipient of GTA services, thereby dismissing the department's appeal and upholding the Respondent's position.

In conclusion, the judgment by the Appellate Tribunal CESTAT HYDERABAD upheld the decision that the Respondent was not liable for service tax as a recipient of GTA services, based on the absence of consignment notes and the criteria defining GTA services under the Service Tax Act, 1994. The detailed analysis of relevant provisions and comparison with a prior case set a clear precedent for similar disputes involving service tax liability in the context of transport services provided by Goods Transport Agencies.