2014 (5) TMI 138 - AT - Service Tax

Demand of service tax - Goods transport agency - expenditure on transportation of sugarcane from the cane collection centers to their sugarcane mills - Held that - admittedly no consignment notes have been issued. The fortnightly bills cannot be treated as consignment notes, as a consignment note issued by Goods Transport Agency represent its liability to transport the consignment handed over to it to the destination and deliver the same to the consignee and merely a bill issued for transportation of goods cannot be treated as Consignment Note. The fact of non issue of consignment to M/s. Nandganj is admitted in the Show Cause Notice itself - The transportation of goods by individual truck owners without issue of consignment note, GR s & billties etc. as prescribed in Rule 4B of the Service Tax Rules, would be simple transportation and not the service of Goods Transport Agency which involves not only undertaking the transportation of the goods handed over to it but also undertaking delivery of the goods to the consignee and also temporary storage of the goods till delivery. When the transports did not issue consignment notes or GRs or Challans or any documents containing the particular as prescribed in Explanation to Rule 4B of the Service Tax Rules, 1994, the Transporters cannot be called Goods Transport Agency and, hence, in these cases, the service of transportation of sugarcane provided by the transporters would not be covered by Section 65(105)(zzp). In view of this we hold 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 view of this the impugned orders are not sustainable and the same are set aside - Decided in favour of assessee.

Summary

Issues:
1. Whether the sugar mills are liable to pay service tax for transportation of sugarcane by individual truck owners.
2. Whether the transporters can be considered as Goods Transport Agency.
3. Eligibility of the sugar mills for abatement under Notification No. 32/04-ST.

Analysis:

Issue 1: Liability for Service Tax
The case involved two sugar mills engaged in the manufacture and sale of sugar and molasses, where the farmers delivered sugarcane to cane collection centers. The transportation of sugarcane to the sugar mills was arranged by individual truck owners, and charges were deducted from the sugarcane price paid to the farmers. The Department contended that the sugar mills received services from Goods Transport Agency, thus liable for service tax under section 65(105)(zzp) of the Finance Act, 1994. Show Cause Notices were issued, and subsequent orders demanded service tax, interest, and penalties from the sugar mills.

Issue 2: Classification of Transporters
The key question was whether the individual truck owners providing transportation services could be classified as Goods Transport Agency as defined under section 65(50b) of the Finance Act, 1994. The Department argued that the fortnightly bills issued by the transporters were akin to consignment notes, making the sugar mills liable for service tax. However, the sugar mills contended that since no consignment notes were issued, they did not receive services from a Goods Transport Agency, thus not liable for service tax.

Issue 3: Abatement Eligibility
Regarding the eligibility of the sugar mills for abatement under Notification No. 32/04-ST, the Commissioner (Appeals) upheld the levy of service tax but allowed abatement for one of the sugar mills. This decision was challenged by both parties in separate appeals.

The Tribunal analyzed the definitions of Goods Transport Agency and consignment notes under the relevant provisions of the Finance Act, 1994. It was established that the transporters did not issue consignment notes as required by Rule 4B of the Service Tax Rules, thus failing to qualify as Goods Transport Agency. The fortnightly bills presented by the transporters were deemed insufficient to be considered as consignment notes. As a result, the Tribunal concluded that the sugar mills did not receive services from a Goods Transport Agency, absolving them of service tax liability. The appeals filed by the sugar mills were allowed, and the Revenue's appeal was dismissed due to the lack of service tax liability.

This detailed analysis of the issues involved in the legal judgment showcases the application of relevant legal provisions and definitions to determine the tax liability of the sugar mills in question.