2017 (11) TMI 481 - AT - Service Tax

GTA service - Short payment of service tax - appellant had received soya seeds from various mandis through trucks, without issuance of the billities/LR (consignment notes) - Held that - The term goods transport agency is defined u/s 65(2) (50b) of the Finance Act, 1994 to mean, any person who provides service in relation to transportation of goods by road and issues consignment notes by whatever name called . Thus, from the above definition, it transpires that in order to qualify a person to be goods transport agency, the mandatory requirement is issuance of the consignment notes, which in the present case has not been issued. Hence, transporters transporting the goods for the appellants are not conforming to the definition of goods transport agency for the purpose of payment of service tax by the appellant under reverse charge mechanism - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellant correctly discharged its service tax liability under the provisions of the Service Tax Rules.
2. Whether the benefit of abatement provided under specific notifications was available to the appellant.
3. Whether the transporters engaged by the appellant qualify as "goods transport agency" for the purpose of service tax levy.

Analysis:
1. The appellant, engaged in the manufacture of soya products, availed transport services for soya transportation to its factory premises. The appellant discharged its service tax liability as the recipient of service under Rule 2(d)(v) of the Service Tax Rules. However, a discrepancy was noted during a Service Tax Department audit, leading to a demand for short-paid service tax amounting to ?28,791 for the period from 1.1.2005 to 31.03.2010. The Department contended that the abatement benefit claimed by the appellant was not valid due to the absence of issued consignment notes for transportation, initiating show cause proceedings resulting in a confirmed service tax demand of ?30,40,450 along with penalties.

2. The appellant argued that the transporters engaged were not "goods transport agents" for service tax levy purposes, citing precedents from the Tribunal. The Department maintained that the abatement benefit was not applicable due to non-fulfillment of specified conditions. The Tribunal analyzed the definition of "goods transport agency" under the Finance Act, emphasizing the necessity of issuing consignment notes. Referring to a previous case, the Tribunal concluded that mere transport operators do not qualify as goods transport agencies for service tax payment, especially when consignment notes were not issued. Consequently, the Tribunal set aside the impugned order confirming the service tax demand, ruling in favor of the appellant.

3. The Tribunal's decision highlighted that the transport operators engaged by the appellant did not meet the criteria to be considered goods transport agents for service tax levy, as they did not issue consignment notes. This finding aligned with the definition under the Finance Act, emphasizing the significance of consignment notes in determining the applicability of service tax. By referencing a relevant precedent, the Tribunal established that the responsibility of transport operators did not align with that of goods transport agencies for service tax purposes, ultimately leading to the allowance of the appeal and disposal of the cross appeal.

This detailed analysis of the judgment outlines the issues, arguments presented, legal interpretations, and the final decision rendered by the Tribunal, providing a comprehensive overview of the case.