2018 (4) TMI 723 - AT - Service Tax

GTA Service - vehicles taken on hire from various truck owners/operators for movement of goods from its warehouse to the client s premises - Held that - the conditions prescribed in Section 65 (105) (zzp) read with Section 65 (50b) of the Finance Act, 1944 have not been fulfilled inasmuch as, a person is to be categorized as a goods transport agent , when only he issues the consignement note in the manner prescribed in the statute. Since, the documents issued by the service provider for transportation of goods are not in confirmity with Rule 4B of the Rules - The said documents cannot be termed as consignment note, and the transporters cannot be termed as goods transport agents, for the purpose of payment of Service Tax by the appellant, as a recipient of service, under reverse charge mechanism. Tribunal in an identical set of facts, in the case of Southeastern Coal Field Ltd. 2016 (8) TMI 677 - CESTAT NEW DELHI has held that in absence of issuance of consignment note, the transporters cannot be treated as goods transport agency for the purpose of levy of Service Tax under GTA services. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Service Tax demand confirmation for transportation charges under the category of Goods Transport Agency service.

Analysis:
1. The appeal challenged the order confirming a Service Tax demand of ?2,76,54,542 along with interest and penalties imposed on the appellant by the Commissioner of Service Tax, New Delhi.
2. The appellant hired vehicles from various truck owners/operators for moving goods, reflecting the expenditure under "Transport, freight, and cartage" in its books. The Service Tax Officers observed non-payment of Service Tax on Transportation Charges under the Goods Transport Agency category, leading to the confirmed demand.
3. The appellant's consultant argued that the truck owners/operators cannot be classified as goods transport agents for Service Tax payment under reverse charge mechanism as they did not issue consignment notes. Citing a Tribunal decision in a similar case, it was contended that without consignment notes, the truck operators/owners cannot be considered goods transport agents.
4. After hearing both sides and examining the case records, the Tribunal reviewed sample bills issued by the transporters to the appellant, noting that the documents did not meet the requirements specified in the Service Tax Rules. As per Section 65(105)(zzp) and Section 65(50b) of the Finance Act, 1994, a person must issue a consignment note to be categorized as a goods transport agent. Since the documents did not comply with Rule 4B of the Rules, the transporters could not be termed as goods transport agents for Service Tax payment by the appellant under reverse charge mechanism.
5. The Tribunal referred to previous decisions where it was held that in cases where no consignment notes were issued, the transporter could not be considered a Goods Transport Agency. The Tribunal emphasized that the definition of a goods transport agency under Section 65(50b) should be understood independently of Rule 4B of the Service Tax Rules, 1994.
6. Based on the legal position and precedents, the Tribunal found no merit in the impugned order confirming the demand against the appellant. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant.