2022 (10) TMI 628 - AT - Service Tax

Levy of penalty u/s 76, 77 and 78 of FA - non-payment of Service Tax on the balance transport charges - taxable service or not - HELD THAT - Appellant has all along taken the view that the service is not taxable service as it was not provided by the goods transport agency, but by goods transport operator and/or individual truck owners namely an individual either owning or operating. This plea has been taken in all the proceedings at the initial stage as well as at the appellate stage and also before the Tribunal. Therefore the Appellant s submission that the service received from the goods transport operators/individual truck owners is acceptable - the decision of the Tribunal in the case of CCE C, GUNTUR VERSUS KANAKA DURGA AGRO OIL PRODUCTS PVT. LTD. ANR. 2009 (3) TMI 130 - CESTAT, BANGALORE holding that there is no liability on the recipient of service in the case of transportation by the individual truck owners and/or individual truck operators and not by goods transport agency to pay Service Tax is squarely attracted. The demand in respect of the other three suppliers are set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Liability of the Appellant to pay Service Tax on balance transport charges.
2. Imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994.
3. Interpretation of invoices and payment of freight charges by consignors.
4. Applicability of Service Tax on services provided by goods transport operators/individual truck owners.

Analysis:
1. The Appellant, engaged in manufacturing Pollution Control Equipment, was under scrutiny for allegedly not paying Service Tax on balance transport charges amounting to Rs.2,79,579. A Show Cause Notice was issued demanding recovery of Rs.34,556 along with penalties. The Appellant argued that for certain suppliers, the consignors had explicitly mentioned that freight charges were to be borne by them, relieving the Appellant of the tax liability. The Tribunal found merit in this argument and set aside the demand related to these suppliers.

2. The Adjudicating authority had imposed penalties under Sections 76, 77, and 78 of the Finance Act, 1994. However, the Tribunal, upon reviewing the case, found that the Appellant's stance that the services received from goods transport operators/individual truck owners were not taxable was valid. Citing precedent cases, the Tribunal ruled that there was no liability on the recipient of service in cases of transportation by individual truck owners/operators, not by goods transport agencies. Consequently, the penalties were set aside.

3. The Tribunal carefully examined the invoices issued by the suppliers of the goods. For one supplier, it was explicitly stated that the consignor would bear the freight charges, absolving the Appellant of the tax liability related to those charges. Regarding other suppliers, the Tribunal noted that the consignors had paid the freight charges, shifting the Service Tax liability to them. The Tribunal emphasized that the Appellant did not pay any freight charges separately and that the consignors had arranged transport to the Appellant's factory.

4. The crux of the matter revolved around the interpretation of whether the services provided by goods transport operators/individual truck owners were subject to Service Tax. The Appellant consistently argued that since the services were not provided by goods transport agencies but by individual truck owners/operators, they were not taxable. Relying on a relevant decision, the Tribunal agreed with the Appellant's position, setting aside the demand related to the services provided by these operators.

In conclusion, the Tribunal set aside the impugned orders and allowed the Appeal filed by the Appellant, providing consequential relief as per the law.