2018 (5) TMI 220 - AT - Service Tax

Classification of services - appellant had made transport expenses for transportation of levy sugar, press mud and for export of sugar - Goods Transport Agency service or Clearing and Forwarding Agent Service? - Held that - for transporting the goods, the transporters did not issue any consignment note s as provided under Rule 4B of Service Tax Rules, 1994 - Further, it is not the case of Revenue that being the agents of the appellant, such transporters have delivered the goods at the customer s place, under the instructions of the appellant. The services provided by the transporters to the appellant should appropriately be classifiable under Clearing and Forwarding Agent Service and not under GTA service - appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of transport services as "Goods Transport Agency" service for the purpose of service tax liability.

Analysis:
The case involved an appeal against an order passed by the Commissioner of Central Excise (Appeals) concerning the classification of transport services availed by the appellant. The appellant, engaged in the manufacture of sugar and molasses, had used transport services for the transportation of levy sugar, press mud, and export of sugar. The Central Excise department interpreted these services as falling under the category of "Goods Transport Agency" service (GTA) and held the appellant liable to pay service tax under reverse charge mechanism. A show-cause notice was issued, and a service tax demand was confirmed along with penalties.

During the proceedings, the appellant contended that the activities of the transporters should be classified as "Clearing and Forwarding Agent service" rather than GTA service. The transporters appointed by the appellant were responsible for loading, unloading, and transporting sugar bags from the factory to railway wagons. The transporters did not issue consignment notes as required by the Service Tax Rules, and there was no evidence that they delivered goods to customers under the appellant's instructions. The Tribunal observed that the services provided by the transporters aligned more with "Clearing and Forwarding Agent Service" rather than GTA service as claimed by the Revenue.

Ultimately, the Tribunal found no merit in the impugned order and allowed the appeal in favor of the appellant. The order was set aside, and the classification of the transport services was determined to be under "Clearing and Forwarding Agent Service" instead of GTA service. The decision was pronounced in court on 20.04.2018 by the Tribunal.