2009 (11) TMI 188 - AT - Service Tax

Notification No. 32/2004-ST, dated 3.12.2004- the show-cause notice proposed recovery of tax on the ground that the assessee, recipient of services, were not liable to claim abatement in terms of Notification No. 32/2004-ST, dated 3-12-2004 while the adjudication order confirms the demand on a different ground namely that the abatement is available only if conditions set out in Board s circular are satisfied which the assessee did not satisfy. In the light of the decision of CCE & C v. Kanaka Durga Agro Oil Products (P.) Ltd. Final Order Nos. 527 & 528 (Bang.) of 2008, dated 12-3-2009 , in which held that there is no liability on a recipient of service in cases of transportation undertaken by the individual truck operators and not by Goods Transport Agencies, to pay service tax, is squarely attracted, held that- set aside the impugned order and allow the appeal.

Summary

Issues: Liability to service tax on service received from Goods Transport Agency, availability of abatement, nature of service provided by 'Goods Transport Operator'.

Liability to service tax on service received from Goods Transport Agency:
The judgment revolves around the demand of service tax, interest, and penalty imposed on the appellants for receiving taxable services from a Goods Transport Agency. The show-cause notice initially proposed tax recovery based on the appellants not being eligible to claim abatement as per Notification No. 32/2004-ST. However, the demand was confirmed on the grounds that abatement conditions specified in the Board's circular were not met by the appellants. The Tribunal found that the service received was not from a Goods Transport Agency but from a Goods Transport Operator, who could be an individual owning or operating a truck. This crucial distinction led to the decision that the service was not taxable, aligning with a previous Tribunal decision that stated there is no liability on the recipient of service when transportation is carried out by individual truck operators instead of Goods Transport Agencies.

Availability of abatement:
The issue of abatement arose concerning the demand for service tax on the services received. The Tribunal noted that the demand confirmation was based on a ground not raised in the show-cause notice, rendering it unsustainable. While the abatement conditions specified in the Board's circular were not met by the appellants, the Tribunal's focus shifted to the nature of the service provider, determining that the service was provided by a Goods Transport Operator rather than a Goods Transport Agency. This shift in focus, along with the absence of meeting abatement conditions, played a significant role in setting aside the impugned order and allowing the appeal.

Nature of service provided by 'Goods Transport Operator':
The crux of the matter lay in establishing whether the service received was from a Goods Transport Agency or a Goods Transport Operator. The appellants consistently argued that the service was provided by a Goods Transport Operator, specifically an individual owning or operating a truck. This argument remained uncontroverted throughout the proceedings, from the initial stage to the appellate level. The Tribunal accepted the appellants' submission that the service was indeed from a Goods Transport Operator, leading to the application of a previous decision that clarified the absence of liability on the recipient of service in cases where transportation was conducted by individual truck operators instead of Goods Transport Agencies. This distinction, coupled with the ground not raised in the show-cause notice, formed the basis for setting aside the demand confirmation and allowing the appeal.