2014 (11) TMI 925 - HC - Service Tax

Court confirms service tax liability on consignments with freight over Rs. 750. Upheld interest levy under Finance Act.

CCE., SALEM Versus SUIBRAMANIA SIVA CO-OP. SUGAR MILLS LTD.

The High Court allowed the Revenue's appeal, confirming the liability of the appellant to pay service tax on consignments with freight exceeding Rs. 750 ... Goods Transport Agency service - Interest on delayed payment of tax - assessee contended that, they would have taken Cenvat credit and utilised the same for payment of Service Tax. - Accordingly, the assessee contended that the levy of interest was not sustainable. - Held that:- Assessee had remitted the tax belatedly and under the advice of their Internal Audit, interest on belated payment being automatic, rightly the Revenue invoked Section 75 of the Finance Act in this case. In the circumstances, we do not find any ground to accept the plea of the assessee herein that interest cannot be demanded on the facts of the case. - in the light of the decision of the Apex Court in the case of Commissioner of Trade Tax (UP) v. Kanhai Ram Thekedar reported in [2005 (4) TMI 75 - SUPREME COURT OF INDIA], we hold that the action taken by the Revenue could not be faulted with. - Decided in favor of revenue. Whether the service from the individual truck operator did not fall within the definition of “Goods Transport Agency” as per Section 65(50b) of the Finance Act, 1994. - Held that:-  The expression “any person” is not defined under the Act. Section 3(42) of the General Clauses Act defines “person”, as including any company or association or body of individual whether incorporated or not. The thrust of the definition is that it includes every person engaged in an activity providing service of transport of goods by road. Thus, any commercial or a proprietary concern carrying on the business of Goods Transport would fall under the definition of “Goods Transport, Agency” in Section 65(50b) of the Finance Act. In the absence of any words of restriction, the definition ‘any person’ thus would have application to any concern providing the service. - Decided in favor of revenue. Issues Involved:1. Permissibility of CESTAT considering new grounds not raised in the original appeal.2. Liability of the appellant to pay service tax on consignments transported with freight value exceeding Rs. 750 but below Rs. 1,500.3. Applicability of exemption under Notification No. 34/2004-S.T.4. Levy of interest on belated payment of service tax under Section 75 of the Finance Act, 1994.5. Scope and definition of 'Goods Transport Agency' under Section 65(50b) of the Finance Act, 1994.Issue-wise Detailed Analysis:1. Permissibility of CESTAT Considering New Grounds:The Revenue questioned whether CESTAT could consider a new ground not raised by the appellant in their Grounds of Appeal or during adjudication or appeal proceedings. The Tribunal had entertained an additional ground by the assessee regarding the definition of 'Goods Transport Agency,' which was not originally raised. The High Court found that the Tribunal's consideration of new grounds was inappropriate, as it deviated from the grounds under which the Deputy Commissioner demanded interest.2. Liability to Pay Service Tax on Consignments with Freight Value Exceeding Rs. 750:The assessee, a Co-operative Sugar Mill, availed services of Goods Transport Agency and paid service tax for freight exceeding Rs. 1,500 but failed to pay for freight exceeding Rs. 750 but below Rs. 1,500. The Revenue argued that the assessee was liable to pay service tax on such consignments and had paid the tax belatedly, attracting interest under Section 75 of the Finance Act, 1994. The High Court upheld the Revenue's stance, confirming the assessee's liability for service tax on consignments with freight exceeding Rs. 750.3. Applicability of Exemption under Notification No. 34/2004-S.T.:The assessee contended that under Notification No. 34/2004-S.T., no service tax was leviable if the freight amount was less than Rs. 1,500 for a full load. The Tribunal remanded the case for verification of whether the transport services were rendered by individual truck operators, which would exempt the assessee from service tax liability. However, the High Court disagreed, stating that the exemption Notification did not apply as the freight exceeded Rs. 750 for a single consignee.4. Levy of Interest on Belated Payment of Service Tax:The Revenue demanded interest on the belated payment of service tax under Section 75 of the Finance Act, 1994. The assessee argued against the interest levy, citing revenue neutrality and voluntary payment. The High Court held that interest on belated payment is automatic under Section 75, confirming the Revenue's invocation of the provision and rejecting the assessee's plea against interest demand.5. Scope and Definition of 'Goods Transport Agency':The Tribunal relied on a previous decision (2009 (15) S.T.R. 399 - Bangalore Bench) and the Finance Minister's Budget Speech to interpret 'Goods Transport Agency' under Section 65(50b) of the Finance Act, 1994. The High Court clarified that the definition includes any person providing transport services by road and issuing consignment notes, not limited to commercial concerns. The Court emphasized that the definition's scope was widened to include any person, thus covering the assessee's case.Conclusion:The High Court allowed the Revenue's appeal, setting aside the Tribunal's remand order. It confirmed the assessee's liability to pay service tax on consignments with freight exceeding Rs. 750, upheld the levy of interest on belated payment under Section 75, and clarified the broad scope of 'Goods Transport Agency' under the Finance Act, 1994. The Court found no merit in the assessee's reliance on the exemption Notification and rejected the plea of limitation.