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2014 (6) TMI 763 - AT - Service TaxDemand of service tax - GTA service - Appellants transport the goods in their own vehicle to the buyer. The buyer is a person who actually pays the freight. - provisions of Section 68(2) of the Finance Act read with Rule 2(1)(d)(v) of Service Tax Rules, 1994. - Circular No. 95/6/2007-S.T., dated 11-6-2007- Held that - it is very clear that the legislative intent is to tax only the services provided by a Goods Transport Agent to a customer and not the owner. - Therefore, the appellant has no liability to pay the service tax. In such circumstances, the action of the Commissioner (Appeals) in setting aside the original order is correct, but there is absolutely no need for remanding the matter. The appellant has no liability at all to pay the service tax. Hence, the appeal is allowed with consequential relief. - Following decision of MSPL Ltd. 2008 (9) TMI 148 - CESTAT, BANGALORE - Decided in favour of assessee.
Issues Involved:
1. Liability to pay Service Tax under Goods Transport Agency (GTA) services. 2. Interpretation of Rule 2(1)(d)(v) of the Service Tax Rules, 1994. 3. Applicability of extended period for issuing show cause notice. 4. Validity of the adjudicating authority's order. Issue-wise Detailed Analysis: 1. Liability to Pay Service Tax under GTA Services: The primary issue in this case is whether the appellant, a Goods Transport Agency (GTA), is liable to pay Service Tax on the freight charges when the freight is paid by the consignee, who are franchisees/customers of EOL. The appellant argued that, as per the Service Tax Rules, the liability to pay Service Tax falls on the person who pays the freight, which could be either the consignor or the consignee. The appellant contended that since EOL, the consignor, is a company registered under the Companies Act, the liability to pay Service Tax should fall on the consignee who pays the freight. The Tribunal agreed with the appellant, stating that the statutory provisions mandate that the Service Tax liability is on the person who pays the freight, not the GTA service provider. 2. Interpretation of Rule 2(1)(d)(v) of the Service Tax Rules, 1994: The appellant's defense relied heavily on the interpretation of Rule 2(1)(d)(v), which specifies that the liability to pay Service Tax is on the consignor or consignee if they fall under certain categories. The Tribunal examined the rule and concluded that it clearly mandates that the Service Tax liability is on the consignor or consignee if they fall under the specified categories, such as being registered under the Factories Act or Companies Act. The Tribunal found that the adjudicating authority's reliance on the C.B.E. & C. Circular dated 17-12-2004 was misplaced, as the circular cannot override the statutory provisions. 3. Applicability of Extended Period for Issuing Show Cause Notice: The appellant argued that the issue was one of interpretation and therefore, the extended period for issuing the show cause notice should not be invoked. The Tribunal did not explicitly address this argument but implicitly supported it by setting aside the adjudicating authority's order, which had confirmed the demand for Service Tax and imposed penalties. 4. Validity of the Adjudicating Authority's Order: The Tribunal found that the adjudicating authority's order was unsustainable. The order had confirmed the demands raised in the show cause notice and imposed penalties under various sections of the Finance Act, 1994. The Tribunal, however, held that the appellant, as a GTA service provider, was not liable to pay Service Tax when the freight was paid by the consignee. The Tribunal cited previous decisions, such as MSPL Ltd. v. CCE and Sicgil India Ltd. v. CCE, which supported the view that the liability to pay Service Tax is on the person who pays the freight. Conclusion: The Tribunal set aside the adjudicating authority's order and allowed the appeal, providing consequential relief to the appellant. The judgment clarified that the Service Tax liability under GTA services falls on the person who pays the freight, whether it is the consignor or consignee, as per Rule 2(1)(d)(v) of the Service Tax Rules, 1994. The Tribunal's decision reinforced the principle that statutory provisions take precedence over administrative circulars.
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