2024 (7) TMI 481 - AT - Service Tax

Short payment of service tax - GTA Services - reverse charge mechanism - reimbursement of expenses - extended period of limitation - HELD THAT - The Appellant has brought in proper evidence to the effect that the major portion of the quantified demand is on account of their turnover pertaining to GTA services - The documentary evidence placed in terms of the Consignment Notes, Invoices and Certificate issued by one of the clients OCP clarifies that without any dispute the Appellant has been providing the GTA services and no Service Tax is required to be paid by them since the Service Tax liability rests on the recipient of the service. The service Tax is not required to be paid on account of reimbursable expenses received by the Appellant - the impugned order is not legally sustainable and we set aside the same and allow the Appeal on merits. As a matter of fact, the Show Cause Notice itself was issued based on the values shown in the Balance Sheet and Profit Loss Account. In respect of the major portion of the demand, no Service Tax is payable since the service involved is that of GTA services. There are no justification in invoking the extended period for confirming the demand. According, the confirmed demand is set aside in respect of the extended period on account of time bar also. Appeal allowed.

Summary

Issues:
Service Tax short payment for the period 2008-09 to 2011-12, Responsibility of Service Tax payment for GTA services, Reimbursement of expenses, Time-bar for Show Cause Notice validity.

Analysis:
1. The Appellant was registered with the Service Tax Department and was providing various services. The Department alleged a short payment of Service Tax amounting to Rs.65,96,250 for the period 2008-09 to 2011-12, based on a comparison of financial documents and ST-3 Returns. The Show Cause Notice was issued invoking extended period provisions, which the Adjudicating Authority confirmed. The Appellant challenged the demand before the Tribunal.

2. The Appellant contended that they primarily engaged in Clearing and Forwarding (C&F) work for Tata Steel units, providing both handling and transportation services. They argued that for GTA services provided to Tata Steel units and OCP India Pvt. Ltd., the responsibility for Service Tax payment rested with the recipients. The Appellant issued Consignment Notes for transportation activities, specifying consignor, consignee, and freight amount.

3. The Appellant presented evidence, including agreements, consignment notes, and invoices, to support their claim that the Service Tax liability for GTA services lay with the recipients. They highlighted separate agreements for C&F and transportation services with Tata Steel units, clarifying the nature of services provided and the corresponding tax liability.

4. The Appellant referenced a certificate from OCP India Pvt. Ltd. confirming discharge of Service Tax on reverse charge mechanism basis for GTA services. They also provided a detailed table showing turnover related to GTA services for different years, emphasizing the recipient's responsibility for tax payment.

5. Additionally, the Appellant received reimbursements for expenses incurred on physical stock verification and acting as a 'pure agent.' They relied on case laws to support their argument that such reimbursements did not form part of taxable consideration. The Tribunal considered the evidence presented by both parties.

6. The Tribunal observed that the Appellant's documentary evidence, including consignment notes, invoices, and client certificates, substantiated their claim regarding GTA services and reimbursement of expenses. They referred to legal interpretations emphasizing that reimbursable expenses should not be included in the taxable service valuation.

7. Based on the evidence and legal principles cited, the Tribunal concluded that the confirmed demand was not legally sustainable. They held that Service Tax was not payable on reimbursable expenses and set aside the demand, allowing the Appeal on merits. The Tribunal also found no justification for invoking the extended period for the Show Cause Notice validity.

8. Consequently, the Tribunal allowed the Appeal, providing consequential relief as per law and setting aside the confirmed demand. The judgment was pronounced on 09/07/2024.