2018 (4) TMI 912 - AT - Service Tax

GTA service - appellant entered into agreement with the owners of van to hire their Vehicles on hire charges at a fixed rate based on kilometer basis - Held that - the Appellant has hired the vehicles on the kilometers basis and monthly bills are raised on the basis of Kilometers travelled by the Vans. In such case when the vehicles are hired on monthly basis and the charges are not based upon destination but on kms basis, it cannot be said that the services involved are of Goods Transport Agency. The charges are fixed not on the basis of destination or quantity of goods or any other basis but solely on kms the vehicles have run in a month. Obviously no consignment note is issued as the services is not of consignment to be taken to any particular destination and therefore the services would not fall under the category of Goods Transport Agency. The issue is squarely covered by the decision in the case of South Eastern Coal Fields Ltd. Versus C.C.E., Raipur 2016 (8) TMI 677 - CESTAT NEW DELHI , where it was held that in absence of consignment note services cannot be considered as GTA Service. The demands of service tax under the category of GTA does not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeals challenging service tax demands under the category of Goods Transport Agency.

Analysis:
The appeals were filed against orders confirming service tax demands on the grounds that the appellant, engaged in the manufacture of Ice Cream, did not discharge service tax liability under the category of Goods Transport Agency. The appellant hired specialized refrigerated vans on a fixed rate based on a kilometer basis for transporting goods to distributors and dealers nationwide. The adjudicating authority and the Appellate Commissioner upheld the demands, stating that the services provided were liable to be taxed as Goods Transport Agency. The appellant argued that no consignment note was issued, and the services should be categorized as a "transfer of right to use" under the constitution. The appellant relied on relevant case laws to support their argument.

The revenue contended that the non-issuance of a consignment note does not exempt the appellant from service tax liability under the Goods Transport Agency category. They argued that the monthly invoices contained essential details equivalent to a consignment note. The revenue highlighted legal provisions and circulars to support their stance, emphasizing that non-compliance with procedural requirements does not absolve the responsibility of paying taxes. They also cited tribunal decisions to assert that individual truck owners could be classified as Goods Transport Agency.

After hearing both sides and examining the records, the Tribunal found that the appellant hired vehicles on a kilometer basis without consignment notes, making the services not fall under the Goods Transport Agency category. The Tribunal referenced a judgment regarding the necessity of a consignment note to fulfill the definition of Goods Transport Agency. They concluded that the tax liability under Goods Transport Agency service could not be sustained against the appellant. The Tribunal also noted the appellant's argument regarding the interpretation of tax liability during the relevant period, stating that the demand was hit by time-bar. Consequently, the impugned order was set aside, and all appeals were allowed with consequential reliefs.

In conclusion, the Tribunal's decision was based on the absence of consignment notes, following established precedents that services without consignment notes cannot be considered as Goods Transport Agency services. The demands for service tax under the Goods Transport Agency category were deemed unsustainable, leading to the setting aside of the impugned order and allowing all appeals with consequential reliefs.