2018 (4) TMI 1103 - AT - Service Tax

Appellate Tribunal rules in favor of clearing agent, no Service Tax liability for consignment services

The Appellate Tribunal CESTAT ALLAHABAD allowed the appeal of the appellant, a clearing and forwarding agent, in a case concerning Service Tax liability ... Classification of services - Maihar Cement Ltd. have been sent to them, the goods i.e. Cement for sale on consignment basis - whether the service classifiable under GTA Service or under clearing and forwarding service? - Held that: - the appellant is neither the service provider nor the service receiver for the transaction of transportation of goods or a GTA under dispute. That the transportation service is provided by some third agency and the receiver of service is the principal-namely Maihar Cement Ltd. Thus, no Service Tax liability arises under the Scheme of the Act and the Rules on the appellant/assessee, who is the consignment agent of Maihar Cement Ltd. - appeal allowed - decided in favor of appellant. Issues:1. Liability of the appellant as a clearing and forwarding agent for Service Tax for GTA service under Section 65 (50b) read with Rule 2(1) (d) (v) of Service Tax Rules, 1994.2. Adjudication of Show Cause Notice (SCN) by the appellant without submitting a defense reply.3. Confirmation of demand and penalties under Section 78 and Section 77(1) (a) read with Section 69 of the Act.4. Dismissal of the appeal by the ld. Commissioner (Appeals).5. Appeal before the Appellate Tribunal CESTAT ALLAHABAD.Analysis:1. The issue revolved around the liability of the appellant as a clearing and forwarding agent for Service Tax for GTA service. The Revenue alleged that the appellant was liable to discharge Service Tax for the transportation of goods sent by Maihar Cement Ltd. for sale on consignment basis. The Service Tax liability was proposed to be demanded for the period 2007–08 & 2008–09 invoking the extended period of limitation. The appellant contended that they were not the service provider or receiver for the transportation of goods, as the goods were sent by Maihar Cement Ltd. for sale on consignment basis. The Tribunal found that the appellant, being the consignment agent, did not have the liability for Service Tax under the Act and Rules. Therefore, the appeal was allowed, and the impugned order was set aside.2. The adjudication of the Show Cause Notice (SCN) was done without the appellant submitting a defense reply. The appellant, through a consultant, requested relevant documents relied upon in the SCN, which were provided promptly. However, no reply was filed by the appellant. As a result, an ex-parte order was passed confirming the demand and penalties. The Tribunal noted this procedural aspect but based its decision on the substantive issue of Service Tax liability, ultimately allowing the appeal.3. The confirmation of demand and penalties under Section 78 and Section 77(1) (a) read with Section 69 of the Act was based on the ex-parte order due to the appellant not submitting a defense reply. The Tribunal's decision to set aside the impugned order also nullified these confirmed demands and penalties, providing the appellant with consequential benefits in accordance with the law.4. The appeal was dismissed by the ld. Commissioner (Appeals), leading the appellant to approach the Appellate Tribunal CESTAT ALLAHABAD for further redress. The Tribunal's detailed analysis and decision overturned the dismissal, allowing the appeal in favor of the appellant based on the absence of Service Tax liability as a consignment agent.5. The appellant's appeal before the Appellate Tribunal CESTAT ALLAHABAD was successful as the Tribunal found that the appellant, acting as a consignment agent, was not liable for Service Tax under the relevant provisions of the Finance Act, 1994 read with Service Tax Rules, 1994. The judgment set aside the impugned order and granted the appellant consequential benefits as per the law.