2018 (7) TMI 1668 - AT - Service Tax

Reverse Charge Mechanism - GTA Service - freight charges exceeding ₹ 1,500/- per trip - benefit of N/N. 34/2004-ST dated 3.12.2004 - case of Revenue is that the limit of ₹ 1,500/- per trip availed by them under Notification No. 34/2004-ST dated 3.12.2004 is not applicable in their case because the same is relevant only when a carriage carry more than one individual consignment and where total freight comes to less than ₹ 1,500/- per trip. Held that - The issue was decided in the case of CCE., SALEM VERSUS SUIBRAMANIA SIVA CO-OP. SUGAR MILLS LTD. 2014 (11) TMI 925 - MADRAS HIGH COURT . As the definition of goods transport agency , means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called , any person who is providing GTA service by road, will fall under the category of GTA service - The argument of the ld.Advocate that since the service providers are mostly individual truck owners do not fall under goods transport agency is not legally sustainable and the GTA service provided by the individual truck owner is leviable to the service tax as per the provisions of the Finance Act, 1994. Benefit under N/N. 34/2004-ST dated 3.12.2004 - Held that - Appellant will fall under the category of Clause (ii) of the above Notification and thus they need to pay service tax on the freight charges above @ ₹ 750/- per trip. Appeal dismissed - decided against appellant.

Summary

Issues:
- Interpretation of Notification No. 34/2004-ST dated 3.12.2004 regarding service tax liability under Goods Transport Agency (GTA) service.
- Applicability of exemption limits for payment of service tax on consignments transported by individual truck owners.
- Classification of individual truck owners under GTA service and liability to pay service tax.
- Entitlement of benefit under Notification No. 34/2004-ST dated 3.12.2004 for exemption from service tax.

Analysis:
1. Interpretation of Notification No. 34/2004-ST: The appeal involved a dispute over the interpretation of Notification No. 34/2004-ST dated 3.12.2004 concerning the service tax liability under GTA service. The appellant contended that they were entitled to the benefit of the notification, which exempts service tax if the gross amount charged on consignments does not exceed a certain limit. However, the Revenue argued that the notification's exemption limits were not applicable to the appellant's case due to specific conditions related to individual consignments and total freight charges per trip.

2. Applicability of Exemption Limits: The Revenue issued a show-cause notice demanding service tax under Section 73 of the Finance Act, 1994, based on their interpretation of the notification. The appellant argued that they had correctly discharged their service tax liability under GTA charges on a reverse charge basis for consignments where freight charges exceeded the specified limit per trip. The appellant relied on previous tribunal decisions to support their claim that service tax was not payable under GTA service in similar situations involving individual truck owners.

3. Classification under GTA Service: The Revenue, supported by the judgment of the Madras High Court, contended that any person providing transport services by road falls under the category of GTA service and is liable to pay service tax. The court's interpretation emphasized that the definition of "goods transport agency" includes any person providing transport services by road, irrespective of individual ownership. This interpretation led to the conclusion that individual truck owners providing transport services were classifiable under GTA service and thus subject to service tax.

4. Entitlement of Exemption Benefit: The appellate tribunal, considering the Madras High Court judgment, held that the appellant's case fell under Clause (ii) of Notification No. 34/2004-ST dated 3.12.2004. Consequently, the appellants were required to pay service tax on freight charges exceeding the specified limit per trip. The tribunal dismissed the appeal, stating that the appellant's argument regarding the non-applicability of GTA service to individual truck owners was legally unsustainable, and upheld the liability to pay service tax as per the Finance Act, 1994.

In conclusion, the judgment clarified the interpretation of Notification No. 34/2004-ST, affirmed the liability of individual truck owners under GTA service for service tax payment, and emphasized the applicability of exemption limits for determining service tax obligations in cases involving consignments transported by individual truck owners.