2023 (9) TMI 303 - AT - Service Tax

Seeking reduction in demand - amount paid by the appellant by way of two Challans dated 05.06.2007 04.06.2008, which were not considered by the adjudicating authority - HELD THAT - The two challans were not considered by the adjudicating authority and at the time of hearing of the Stay Petition filed by the appellant, the same were sent for verification but the respondent neither denied the said payment made by the appellant nor verified the same from their records. Therefore, it was concluded by the Tribunal while considering the Stay Petition that the appellant has paid the said amount. Therefore, to that extent, the demand of service tax of Rs.12,99,559/- is not sustainable. Liability of appellant to pay tax - contention is that the service tax on the said service was paid by the service provider i.e. transporter, who raised the bills on the appellant, which showing that the service tax has been paid by them - HELD THAT - It is evident from the records that the transporter, who has transported the goods at the premises of the appellant, has paid the service tax on the transportation service and the same is made evident from the invoices. In that circumstances, the demand of Rs.3,29,320/- is not sustainable against the appellant. GTA Services - freight paid sale - HELD THAT - It is evident from the record that the service received by the appellant for transportation of goods on sale to their various buyers. Therefore, the said service is not a service received by the appellant, in fact, the appellant has paid the transportation charges for the railways of transportation of goods outward from their factory. In that circumstances, the appellant is not liable to pay service tax thereof. Therefore, the demand of Rs.3,40,377/- is not sustainable. Outward Freight - provision made for payment of freight - HELD THAT - The appellant was not receiving the invoices of transportation charges from the transporter and later on the transporter sent the invoices of less amount on which the service tax is paid to them. In that circumstances, the provision made by the appellant is adjusted at the end of the year and the said entry has been taken in the corresponding year. In that circumstances, the appellant is required to pay service tax on actual transportation charges not on the provision made for transportation charges. Therefore, the said demand is also not sustainable. Thus, whole of the demand by way of impugned order is not sustainable against the appellant - the impugned order qua demanding service tax of Rs.28,47,510/- is set aside and the appeal is allowed.

Summary

Issues:
The issues involved in the judgment are related to the demand of service tax on transportation charges paid by an appellant, discrepancies in service tax payments, and the applicability of reverse charge mechanism.

Demand of Service Tax on Transportation Charges:
The appellant, a mini integrated steel plant, was engaged in the manufacture of various products and procured inputs for manufacturing. The transportation charges for carriage inward and outward showed variations, leading to an allegation of underpayment of service tax. A show-cause notice was issued demanding service tax, which was partially confirmed after adjudication. The appellant contended that certain amounts were already paid and not considered, and that in some instances, the service tax was already paid by the transporter or the charges were related to sales, not qualifying as input services for the appellant.

Contentions and Findings:
The authorized representative for the appellant argued that certain amounts were already paid by the appellant, service tax was paid by the transporter in some cases, and in other instances, the charges were related to sales and not liable for service tax. After considering the submissions and verifying records, the Tribunal found that the appellant had indeed paid certain amounts, the service tax was already paid by the transporter in some cases, and the charges related to sales were not subject to service tax. Consequently, the Tribunal held that the entire demand of service tax was not sustainable against the appellant.

Conclusion:
In conclusion, the Tribunal set aside the impugned order demanding service tax, amounting to Rs. 28,47,510/-, against the appellant. The appeal was allowed with consequential relief, if any, in favor of the appellant. The judgment was pronounced in the open court on 06.09.2023 by the Tribunal.