2014 (5) TMI 982 - AT - Service Tax

Waiver of pre deposit - transportation service - Held that - Prima facie, we are in agreement with the submission of learned advocate for the applicant that there is no other Goods Transport Agency involved in this case and the applicant has procured the services of transporters for executing his responsibility under the contract with his clients and he is entitled to earn reasonable profit in the activity. It is seen from para-2 in the show cause notice that applicant had paid service tax on the total receipts under the category of GTA service after availing abatement. We therefore consider that, in this case, there is no need to call for any further pre-deposit for admission of appeal. - stay granted.

Summary

Issues:
1. Interpretation of service tax liability on transportation services provided by the appellant.
2. Whether the appellant correctly availed abatement under the category of 'Goods Transport Agency' for service tax calculation.
3. Classification of additional charges billed by the appellant for transportation services.
4. Applicability of 'Business Auxiliary Service' classification on extra charges.
5. Validity of the demand for service tax by the Revenue.

Analysis:

1. The appellant, engaged in various activities including transportation services, faced a dispute regarding service tax payment for transportation services provided to clients. The appellant hired vehicles from independent owners, paid hire charges, and billed clients at higher rates. The appellant paid service tax under the 'Goods Transport Agency' category with a 25% abatement on the total amount charged.

2. The Revenue contended that the abatement should only apply to the actual transportation value paid to vehicle owners, while the additional billed amount should be classified separately as consideration for 'Business Auxiliary Service,' not eligible for abatement. Two show-cause notices were issued for service tax short paid, resulting in a confirmed demand of Rs. 2,08,58,687/- along with interest and penalty.

3. The appellant argued that they acted as the sole 'Goods Transport Agency,' and the vehicle suppliers only provided tangible goods, exempted under notification 1/09-ST. The appellant maintained that the entire consideration charged for the service should be considered remuneration for taxable services of Goods Transport Agency, justifying the abatement of 25%.

4. The Revenue countered that the value of 'Goods Transport Agency Service' should only include amounts paid to vehicle owners, while the extra billed amounts were for procuring services of vehicle owners as input services, falling under 'Business Auxiliary Service' classification.

5. After considering both arguments, the Tribunal agreed with the appellant that no other Goods Transport Agency was involved, and the appellant had paid service tax under the GTA category after abatement. The Tribunal found no need for further pre-deposit for appeal admission and ordered a stay on the collection of dues pending the appeal, indicating a favorable decision for the appellant.