2023 (2) TMI 1092 - AT - Service Tax

Reverse charge mechanism (RCM) - charges incurred for hiring of refrigerated vehicles, deployed for distribution of ice cream at different places across the country - lower authorities have held that liability devolved on the appellant, as recipient of goods transport agency service, defined in section 65(50a) of Finance Act, 1994, for discharge of tax. HELD THAT - The catena of decisions cited by Learned Counsel relate to tax liability not arising in circumstances that are similar to that of appellant; mere hiring of vehicles does not suffice for transaction to be taxed under Finance Act, 1994 unless the elements of section 65 (105) (zzp) of Finance Act, 1994, in which the definition of goods transport agency is vital, is conformed to. In re Nandganj Sihori Sugar Co. Ltd 2014 (5) TMI 138 - CESTAT NEW DELHI , it has been 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. The appeal of Revenue against the decision in re South Eastern Coalfields Ltd 2016 (8) TMI 677 - CESTAT NEW DELHI does not, in the absence of stay, alter the validity of the decision of the Tribunal on non-taxability of the very same transaction of the appellant herein for the subsequent period. Appeal allowed.

Issues Involved:
1. Taxability of charges for hiring refrigerated vehicles under 'reverse charge' as per section 65(105)(zzp) of the Finance Act, 1994.
2. Applicability of 'goods transport agency' (GTA) service definition under section 65(50a) of the Finance Act, 1994.
3. Requirement of a consignment note for taxability under GTA service.
4. Consistency with previous Tribunal decisions and the impact of the New Litigation Policy (NLP) on the acceptance of these decisions.
5. Time-bar and the extended period of limitation for the demand.

Detailed Analysis:

1. Taxability of Charges for Hiring Refrigerated Vehicles:
The central issue in the appeals was whether the charges incurred for hiring refrigerated vehicles for distributing ice cream nationwide were taxable under the 'reverse charge' mechanism specified in section 65(105)(zzp) of the Finance Act, 1994. The lower authorities had determined that the appellant, as the recipient of 'goods transport agency' (GTA) services, was liable for the tax.

2. Definition of 'Goods Transport Agency' (GTA) Service:
The appellant argued that the vehicles were hired on a kilometer basis, with no relevance to destination or quantity carried, and thus did not meet the definition of GTA service, which requires the issuance of a consignment note. This position was supported by the Tribunal's decision in Dinshaw Dairy Foods Ltd. vs. Commissioner of Central Excise, Nagpur, where it was held that services based on kilometers traveled without a consignment note do not qualify as GTA services.

3. Requirement of a Consignment Note:
The Tribunal emphasized that the issuance of a consignment note is a non-derogable requirement for a service to be classified as GTA. This was reinforced by multiple decisions, including South Eastern Coalfields Ltd. vs. Commissioner of Central Excise, Raipur, and Nandganj Sihori Sugar Co. Ltd. vs. Commissioner of Central Excise, Lucknow, which held that without a consignment note, the service cannot be taxed as GTA. The Tribunal reiterated that mere transportation of goods without a consignment note does not fulfill the criteria for GTA services under section 65(50b).

4. Consistency with Previous Tribunal Decisions and NLP Impact:
The appellant's counsel cited previous Tribunal decisions to support their case, while the respondent's representative conceded that although the decision in Dinshaw Dairy Foods Ltd. excluded tax liability, it was not appealed due to the constraints of the New Litigation Policy (NLP). The Tribunal noted that the absence of a stay on the appeal against the decision in South Eastern Coalfields Ltd. did not affect the validity of the Tribunal's ruling on non-taxability for the appellant's subsequent period.

5. Time-bar and Extended Period of Limitation:
The appellant also contested the demand on the grounds of time-bar, arguing that the issue involved interpretation regarding tax liability and that there was no suppression of facts to justify invoking the extended period of limitation. The Tribunal agreed, noting that the appellant's contention on the issue of interpretation was valid and that substantial demand would be hit by time-bar.

Conclusion:
The Tribunal concluded that the tax liability under GTA service could not be sustained against the appellant. It set aside the impugned order, allowing the appeals with consequential reliefs. The Tribunal's decision was consistent with earlier rulings that without the issuance of a consignment note, the service does not qualify as GTA, thus exempting the appellant from the alleged tax liability.

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