2013 (9) TMI 107 - AT - Service Tax

Reverse charge on GTA service - Transportation of the goods Whether the consignment agent was making the payment on behalf of the applicants and who was to pay the service tax - The consignment agents had paid the service tax liability as per the provisions of Rule 2(d)(i)(5) r.w. Notification No. 35/2004-ST under reverse charge mechanism Held that - The fact that the consignment agents were acting as consignment agents may not ipso facto mean that they were paying freight also as agent of the principal - Further when both consigner and consignee fall in one of the specified categories under Notification No. 35/2004 - it was doubtful whether Revenue can insist that payment should be made by the consignor and not by the consignee especially having regard to the fact that in these cases the payments were made by consignees pre deposit of the duty waived Decided in favor of assesse.

Summary

Issues:
Service tax liability for transportation of goods from factory to consignment agents.

Analysis:

Issue 1: Service Tax Liability
The issue at hand involves the service tax liability for the transportation of goods from the factory of the manufacturers to the consignment agents. The dispute revolves around whether the consignment agents were making payments on behalf of the manufacturers and who should bear the service tax liability. The Revenue contended that the consignment agents were paying freight on behalf of the manufacturers, thus making the manufacturers liable to discharge the service tax as per the relevant provisions. Various demands were proposed against different manufacturing firms, as listed in the judgment.

Issue 2: Judicial Precedent
The counsel for the manufacturers argued that a similar issue was decided in favor of the manufacturers by the Tribunal in previous cases, citing Appeal Nos. ST/284 and 785 to 788/2010. The counsel requested that the present appeals should be admitted without requiring a pre-deposit, based on the precedent set by the Tribunal in the earlier cases.

Issue 3: Revenue's Position
On the other hand, the Revenue opposed the manufacturers' request, stating that the Revenue had not challenged the previous orders due to the national litigation policy of not pursuing appeals in cases involving small amounts. The Revenue maintained that the manufacturers were liable to pay the service tax since the consignment agents were paying freight on behalf of the manufacturers and deducting the amounts from payments due to the manufacturers. The Revenue also highlighted that the consignment agents did not fully pay the service tax, as indicated in paragraph 25 of the impugned order.

Judgment and Decision
After considering the arguments from both sides, the Tribunal opined that the mere fact that consignment agents were acting on behalf of the manufacturers did not automatically imply that they were paying freight as agents of the manufacturers. Additionally, when both the consigner and consignee fell within specified categories under the relevant notification, it raised doubts on whether the Revenue could insist on payment by the consignor instead of the consignee, especially when the payments were made by the consignees in these cases. The Tribunal, prima facie, relied on its previous orders in similar matters and decided to waive the requirement of pre-deposit for admitting the appeals, staying the collection of the demanded amounts during the pendency of the appeals.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved, the arguments presented by both parties, and the Tribunal's decision based on legal principles and precedents.