2024 (7) TMI 1315 - AT - Service Tax

Levy of service tax on reverse charge mechanism - availing goods transport agency services by a manufacturer of ice-cream - HELD THAT - It is to be placed on the record that negative list introduced under Section 66D w.e.f. 01.07.2012 has clearly excluded under Sub-Clause (p) services by way of transportation of goods by road but not services of a Goods Transport Agency . Therefore, if such services are provided by Goods Transport Agency then the same is subjected to Service Tax. Goods Transport Agency itself is defined under Section 65(50b) of the Finance Act, 1994, which means service in relation to transport of goods by road by any person and issue of consignment note, by whatever name called and Rule, 4B of the Service Tax Rules provides for mandatory issue of consignment notes by Goods Transport Agency while providing service in relation to transportation of goods by road in a goods carriage except when wholly exempted under Section 93 of the Act. It is found that no consignment note was issued by the goods transporter to the Appellant as per the description mentioned above, neither in the invoices raised by the transporter as provided in the second proviso to Rule 4A nor by way of separate consignment note in the form of a document as described in the explanation reproduced and those provisions have not undergone any change in the second amendment of 2012 made to Service Tax Rules, 1994 effective from 01.07.2012. Thus, procurement of vehicle or hiring of vehicle on kilometre basis without any connection with the destination or quantity cannot bring the nature of service offered through contractual engagement of the vehicles by its owners into the purview of Goods Transport Agency service, so as to impose Service Tax on reverse charge mechanism on the service recipient. The impugned order is set aside - appeal allowed.

Summary

Issues:
Confirmation of demand of Service Tax on 'reverse charge mechanism' for availing 'goods transport agency services' by a manufacturer of ice-cream.

Analysis:
The case involved the challenge to the confirmation of demand of Service Tax on 'reverse charge mechanism' for availing 'goods transport agency services' by a manufacturer of ice-cream. The Appellant was receiving transportation services for its finished products from various enterprises and roadways, with bills raised on a per kilometre basis. The Respondent-Department contended that the Appellant was liable to pay Service Tax under Section 65(44) of the Finance Act read with Section 26B(26) of the Finance Act, 1994, and Notification No. 26 & 30/2012-ST dated 20.06.2012. The Appellant was issued show-cause notices for a substantial amount, which led to unsuccessful contests before the Additional Commissioner and the Commissioner (Appeals). The Appellant then appealed to seek relief from the order passed by the Commissioner (Appeals) jointly for both periods, leading to the current appeal before the forum. The Appellant's Counsel argued that previous decisions by the Tribunal had held that the services in question did not fall under the category of 'Goods Transport Agency' service. However, the Respondent's Authorised Representative supported the order passed by the Commissioner (Appeals) due to changes in the law post the negative list introduction.

The Tribunal examined the relevant provisions of law and past decisions. It noted that services by 'Goods Transport Agency' were not excluded under the negative list introduced under Section 66D w.e.f. 01.07.2012. The definition of 'Goods Transport Agency' under Section 65(50b) of the Finance Act, 1994, was considered, emphasizing the issuance of consignment notes as a key element. It was observed that no consignment note meeting the specified criteria was issued by the goods transporter to the Appellant. The Tribunal reiterated that hiring a vehicle on a kilometre basis without a specific connection to the destination or quantity did not constitute 'Goods Transport Agency' service. Relying on its previous decisions, the Tribunal allowed the appeals and set aside the order passed by the Commissioner of Central Excise & Customs (Appeals), Nagpur, with consequential relief.

In conclusion, the Tribunal's decision was based on the interpretation of relevant legal provisions and past precedents, emphasizing the absence of consignment notes meeting the defined criteria and the nature of the services provided. The Tribunal's ruling provided relief to the Appellant by overturning the order of the Commissioner (Appeals) and highlighting the consistent application of legal principles in similar cases.