2014 (11) TMI 87 - HC - Service Tax

GTA services - reverse charge - commercial concern or proprietor - Held that - Section 65(50b) of Finance Act, did not cover a case of proprietary commercial concern to be treated as Goods Transport Agency and set aside the order of CESTAT that the expression commercial concern would include a proprietary concern also. - Decided in favor of assessee.

Summary

Issues:
Interpretation of Section 65(50b) of the Finance Act, 1994 regarding Goods Transport Agency liability for Service Tax.

Analysis:
The case involved an appeal by the Revenue against a Final Order passed by the Customs Excise & Service Tax Appellate Tribunal (CESTAT) concerning the liability of an assessee engaged in the manufacture of polished granite monuments/slabs/tiles for Service Tax on services provided by Goods Transport Agency. The period in question was from January 2005 to June 2005. Despite notice, the assessee did not appear before the Court, leading to a decision based on the records and submissions of the Revenue's counsel.

The Revenue initiated proceedings against the assessee for not paying Service Tax on services received from the Goods Transport Agency, citing Section 65(50b) of the Finance Act, 1994. The assessee argued that they did not engage a Goods Transport Agency as defined in the Act, as they only used individual operators who did not issue consignment notes or invoices. The Revenue contended that Rule 4B of the Service Tax Rules mandates Goods Transport Agencies to issue consignment notes for taxable services, and the recipient cannot avoid Service Tax due to the Agency's failure to issue such notes.

The Customs Excise and Service Tax Appellate Tribunal (CESTAT) allowed the assessee's appeal based on the interpretation of Section 65(50b) in line with previous decisions. However, the High Court, in reference to its own previous judgment, held that individual operators fall under the definition of 'commercial concern' as per Section 65(50b) of the Finance Act. This decision set aside the CESTAT's order, allowing the Revenue's appeal and confirming the liability of the assessee for Service Tax.

In conclusion, the High Court's judgment clarified that individual operators are considered 'commercial concerns' under Section 65(50b) of the Finance Act, thereby upholding the Revenue's claim for Service Tax against the assessee.