2014 (6) TMI 657 - AT - Service Tax

Denial of refund claim - service tax paid GTA services - consignment note was not issued by the Goods Transport agency - after coming to know that they were not liable to pay they filed a refund claim - Held that - definition of consignment note in Rule 4B appears to have been provided to ensure that the recipient of the services who is required to pay Service Tax in accordance with Notification No. 35/2004-S.T. in the capacity of recipient can take the Cenvat credit was if all the details which are required as per Cenvat Credit Rules, 2004 are available and is not denied the benefit of credit on the ground that a proper consignment note has not been issued. The question that arises is just because private truck operator or a GTA violates the provisions of Rule 4B by not issuing a consignment note can the recipient refuse to pay Service Tax. According to the law, recipient of the services has been made liable to pay and there is no dispute on this issue. According to Notification No. 35/2004-S.T., person who pays the freight is liable to pay. Therefore just because a person has not issued consignment note in accordance with law and violated the provisions of law, it cannot be held that the recipient also can claim that he would also violate the law. Therefore, on analysis of the statutory provisions and Notification, etc., the recipient is liable to pay Service Tax in situation like this and therefore the refund claim has correctly been rejected. - Decided against the assessee. Rejection of refund claim of the ground of no challenge to assessment order - Held that - When the Revenue contends that the appellant/assessee should have challenged the assessment before filing refund claim, it is expecting the impossible since how can a person challenge his own assessment. Moreover, this leads to the question as to before whom assessment should be challenged. In this case, assessment is by the assessee and this has to be treated as the Order-in-Original but there is no appellate authority prescribed in the statute. Therefore this is not a correct proposition of law. - the view taken by the Revenue that refund claim can be rejected on the ground that the refund claim has been made without challenging the assessment order cannot be sustained.

Summary

Issues:
Refund claim rejection based on service tax paid to individual truck owners/operators. Appellant's contention on non-liability to pay service tax. Appellant's reliance on Tribunal decisions for refund claim. Interpretation of GTA definition and consignment note issuance. Rejection of refund claim based on not challenging assessment order.

Detailed Analysis:
1. Refund Claim Rejection: The appellant, a manufacturer of oils and related products, filed a refund claim for service tax paid to individual truck owners/operators from whom they received services. The claim was based on the argument that since private truck owners/operators did not issue consignment notes, the services received were not taxable under GTA service. The lower authorities rejected the refund claim, leading to the appeal.

2. Appellant's Contention: The appellant ceased paying service tax to individual truck owners/operators from May 2008 after realizing they were not liable to pay. The refund claim, amounting to Rs. 9,80,863, covered service tax paid from November 2007 to April 2008. The appellant argued that they followed Tribunal decisions to support their refund claim, citing specific cases.

3. Interpretation of GTA Definition: The Tribunal analyzed the definition of "goods transport agency" under sub-section (50b) of Section 65 of the Finance Act, 1994. It emphasized that a person providing services in the transport of goods by road and issuing a consignment note falls under the GTA definition. The appellant's argument that only the term "agency" is covered and not the truck owner was dismissed, highlighting the significance of the 2004 amendment replacing "commercial concern" with "any person."

4. Consignment Note Issuance: The Tribunal delved into Rule 4B of the Service Tax Rules, 1994, regarding consignment note issuance by GTAs. It clarified that a GTA must issue a consignment note as per the rule, and the absence of a proper consignment note does not absolve the recipient from paying service tax. The recipient's liability to pay service tax was underscored, irrespective of the GTA's compliance with consignment note rules.

5. Refund Claim Rejection Basis: The Tribunal rejected the refund claim based on the appellant's failure to challenge the assessment order. It analyzed precedents in customs and excise cases, highlighting the distinction between assessment and refund procedures. The Revenue's argument that the appellant should have challenged the assessment before filing a refund claim was deemed untenable, as challenging one's assessment was deemed impractical.

6. Conclusion: Considering the detailed analysis of the issues, the Tribunal found no merit in the appeal and rejected it. The judgment emphasized the legal obligations regarding service tax payment, consignment note issuance, and the procedural aspects of challenging assessment orders before filing refund claims.