Tribunal: Toll tax reimbursed to transporter not subject to service tax

The Tribunal ruled that the toll tax reimbursed to the transporter by the respondent is not liable to service tax as part of the gross value of the GTA service. The decision was based on the classification of toll tax as a statutory levy rather than a service charge, in accordance with constitutional provisions and legal precedents. The Tribunal upheld the Commissioner (Appeals) order, dismissing the revenue's appeal.

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Issues:
1. Whether toll tax reimbursed to the transporter is liable to service tax as part of the gross value of the GTA service.

Analysis:
The case involved a dispute regarding the liability of service tax on the toll tax reimbursed to a transporter by the service recipient, M/s. Indian Oil Corporation Ltd., for transportation services. The department contended that the toll tax should be included in the gross value of the transportation charges for service tax purposes. The Commissioner (Appeals) allowed the appeal of the respondent, holding that toll tax being a statutory levy cannot be included in the freight amount for service tax calculation. The revenue challenged this decision in the appeal.

The revenue argued that toll tax forms part of the gross value of transportation as it is a reimbursable expenditure recovered by the transporter. On the other hand, the respondent's counsel contended that toll tax is a statutory levy and cannot be levied with service tax. She further argued that the transporter acts as a pure agent of the respondent, and even if toll tax is considered a reimbursable expenditure, it should be deducted from the gross value of the GTA service, making it not liable to service tax.

The Tribunal analyzed the issue and held that toll tax is not a service charge but a statutory levy listed under the State list of the Constitution of India. As the respondent is deemed the service provider in the case of GTA service, the total transportation value is chargeable to service tax. However, since toll tax is a statutory levy, it cannot attract service tax. The Tribunal upheld the Commissioner (Appeals) order, stating that the toll tax should not be included in the value for service tax calculation, thereby dismissing the revenue's appeal.

In conclusion, the Tribunal ruled that the toll tax reimbursed to the transporter by the respondent is not liable to service tax as part of the gross value of the GTA service, considering it as a statutory levy and not a service charge, in line with the constitutional provisions and legal precedents cited during the proceedings.

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