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2012 (10) TMI 159 - AT - Service TaxLevy of service tax on the Chini Mills alleged that goods transport agency service was availed by the chini mill - when the sugar cane is transported from the collection centre to the factory, service of truck operators, Bullock Carts, Tractors are availed - When the payment of sugar cane is made to farmers, deduction is made from their bills towards transport cost etc. and farmer who bears the transport cost, the appellant does not bear such cost in respect of their supplies Held that - Transport cost incurred by farmers to bring the collected sugar cane to factory does not exceed ₹ 1500/- for which there shall be no levy following the spirit to Notification No.34/04 - sugar cane transported through goods carriage from sugar cane centre to the factory either may be in different consignments or may be in one consignment. The assessees are required to explain their proper defence because legislature did not intend the small transporter to be brought under the fold of law - notifications being beneficial in nature and touches poor farmers, it cannot be said that there was mala fide to suppress the facts and figures because the mode of transport of sugar cane in sugar industry is well known to the society matter remanded back to Adjudicating Authority
Issues Involved:
1. Levy of service tax on Chini Mills for availing goods transport agency (GTA) services. 2. Definition and applicability of "goods transport agency." 3. Exemptions under Notification No. 32/2004-ST and Notification No. 34/2004-ST. 4. Requirement and format of consignment notes under Rule 4B of the Service Tax Rules, 1994. 5. Applicability of penalties for non-compliance. Detailed Analysis: 1. Levy of Service Tax on Chini Mills for Availing GTA Services: The core issue was whether the transport of sugar cane from collection centers to the factory by Chini Mills using trucks, tractors, and bullock carts constitutes availing services from a goods transport agency (GTA), thereby attracting service tax. The mills argued that they did not engage any GTA, but individual truck owners, who are not considered GTAs under the law. The transport costs were borne by the farmers and deducted from their bills, implying that the mills did not directly bear the transport costs. 2. Definition and Applicability of "Goods Transport Agency": The definition of "goods transport agency" under Section 65(50b) of the Finance Act, 1994, was crucial. It defines a GTA as any commercial concern providing transport services by road and issuing consignment notes. The mills contended that individual truck owners do not qualify as GTAs since they do not issue consignment notes and are not commercial concerns. The court noted that the transport service must be provided by a commercial concern issuing consignment notes to fall under the taxable category. 3. Exemptions under Notification No. 32/2004-ST and Notification No. 34/2004-ST: Notification No. 32/2004-ST grants abatement for GTA services, and Notification No. 34/2004-ST provides exemptions where the transport cost does not exceed Rs. 1500 per consignment or Rs. 750 per individual consignment. The mills argued that most transport costs incurred by farmers fell within these exemption limits. The court emphasized that these notifications are part of the legislation and must be considered during adjudication. 4. Requirement and Format of Consignment Notes under Rule 4B of the Service Tax Rules, 1994: Rule 4B mandates that a GTA must issue a consignment note containing specific details, including the names of the consignor and consignee, registration number of the goods carriage, and details of the goods transported. The court noted that if the transport is done by bullock carts, which do not have registration numbers, they cannot be taxed under the GTA provisions. The court also agreed that consignment notes need not follow a specific format but must contain the prescribed particulars. 5. Applicability of Penalties for Non-Compliance: The court recognized the confusion and difficulties experienced by both the assessees and the authorities during the infancy stage of the GTA service tax implementation. It was noted that the notifications were intended to benefit small transporters and economically weaker farmers. Therefore, the court suggested leniency in imposing penalties and left it to the adjudicating authority to decide on penalties afresh, considering the Supreme Court's ruling in the Rajasthan Spinning Mills Ltd. case. Conclusion: The appeals were remanded to the adjudicating authority for fresh adjudication based on the guidelines provided. The authority was directed to consider the statutory provisions, notifications, and the nature of the transport services involved. The court emphasized the need for reasoned and speaking orders to resolve the issues comprehensively. The stay applications were disposed of, and the requirement for pre-deposit was waived in the remanded cases.
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