Appellants not liable for service tax on freight amount as consignment agents already paid.

The tribunal ruled in favor of the appellants, holding that they were not liable for the service tax on the freight amount as the consignment agents had paid and accounted for it. The judgment clarified the distinction in liability under the Service Tax Rules, ultimately absolving the appellants of the tax obligation in this scenario.

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Issues:
Service tax liability on freight amount not paid by appellants but paid by consignment agents.

Analysis:
The judgment revolves around the issue of service tax liability concerning the freight amount not paid by the appellants but covered by the consignment agents. The appellants, paper mills dispatching goods through agents, argued that the consignment agents paid the freight and discharged the service tax liability. The Division Bench had previously waived the predeposit requirement in a similar case. The Ld. Advocate presented a certificate from a Chartered Accountant confirming the consignment agents' payment of freight and service tax. On the other hand, the Ld. SDR contended that the appellants, as paper mills, were liable to pay service tax under Rule 2(1)(d)(v) of the Service Tax Rules, 1994.

The tribunal analyzed the legal provisions and facts presented by both sides. It noted that the appellants did not pay the freight to transporters, which was acknowledged in the impugned order as being covered by the consignment agents. Rule 2(1)(d)(v) specifies that the person liable for paying service tax includes entities like companies and consignment agents. However, the tribunal observed that the consignment agents paid the freight and recovered it from the buyers, as evidenced by the Chartered Accountant's certificates. The tribunal concluded that the consignment agents fell under the category of persons liable to pay service tax, not the appellants. It emphasized that if any consignment agents had not paid the service tax, they would be subject to departmental action. Consequently, the demands against the appellants were deemed unsustainable, and the impugned orders were set aside, allowing all five appeals.

In summary, the tribunal ruled in favor of the appellants, holding that they were not liable for the service tax on the freight amount since the consignment agents had paid and accounted for it. The judgment clarified the distinction in liability under the Service Tax Rules, ultimately absolving the appellants of the tax obligation in this scenario.

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