2007 (12) TMI 24 - AT - Service Tax

Tribunal Upheld Commissioner's Decision on Goods Transport Agency Service Tax Liability

The Tribunal upheld the Commissioner (Appeals) decision, rejecting the Department's appeal against the order. The decision emphasized that the consignee, ... Abatement under Notification No. 32/2004-S.T. - deemed service provider under Section 68(2) - condition of non-availment of input/capital goods credit - liability to pay service tax in Goods Transport Agency servicesAbatement under Notification No. 32/2004-S.T. - condition of non-availment of input/capital goods credit - deemed service provider under Section 68(2) - liability to pay service tax in Goods Transport Agency services - Entitlement of the consignee, deemed provider who paid freight, to claim 75% abatement under Notification No. 32/2004-S.T. despite absence of a declaration from the Goods Transport Agency regarding non-availment of credit of duty on inputs/capital goods. - HELD THAT: - The Commissioner (Appeals) held that the proviso to Notification No. 32/2004-S.T. refers to the Goods Transport Agency as the service provider and not to consignors/consignees; therefore the requirement concerning non-availment of credit by the transport provider cannot be applied to a consignee who is a deemed provider only because it paid freight. A consignee who pays tax as a deemed service provider under Section 68(2) has not actually rendered the GTA service and cannot be said to have availed input or capital goods credit in relation to the transport service; the condition regarding non-availment of credit must necessarily relate to the services actually rendered by the transport agency. On these findings the Commissioner (Appeals) rightly concluded that denial of the 75% abatement to the consignee on the ground that no declaration from the transport agency was produced was not justified. The Tribunal concurs with and affirms that reasoning and the finding of the Commissioner (Appeals). [Paras 5, 6]The Commissioner (Appeals) finding that the consignee who paid freight is entitled to the 75% abatement under Notification No. 32/2004-S.T. and that the condition regarding non-availment of input/capital goods credit applies to the actual Goods Transport Agency, not to the consignee, is upheld.Final Conclusion: The appeal by the Department is rejected and the order of the Commissioner (Appeals) dated 20-2-2007 is upheld. Issues:Appeal against order of Commissioner (Appeals) regarding service tax on Goods Transport Agency services.Analysis:The appeal concerned the respondent availing services of a Goods Transport Agency, paying freight as a consignee, and service tax as a deemed service provider under Notification No. 32/2004-S.T. The original authority required a declaration from the Transport Agency regarding input credit, but the Commissioner (Appeals) held that the respondent, as a consignee, paying tax did not need to consider input credit of the Transport Agency. The Commissioner emphasized that the abatement for service tax did not depend on the credit taken by the respondent. The Commissioner's decision was based on the interpretation that the taxable service referred to the Goods Transport Agency, not the consignees, and thus, the consignees' credit did not affect the abatement entitlement.Regarding Goods Transport Agency services, the responsibility to pay tax could be on the consignor or consignee based on who paid the freight. The condition of not taking credit of duty paid on inputs or capital goods should relate to the services provided by the Transport Agency. The respondent, as a consignor, did not avail credit for providing taxable services, as they only paid the tax that the Transport Agency should have paid. The judgment supported the Commissioner's decision as legally sound and proper, emphasizing that the respondent's actions were in line with the law.Ultimately, the Tribunal upheld the Commissioner (Appeals) decision, stating that there was no reason to interfere with the findings. The appeal by the Department against the order was rejected, affirming the Commissioner's interpretation and decision regarding the service tax liability on Goods Transport Agency services.