2018 (7) TMI 1123 - AT - Service Tax

Transporter of food grains not classified as Goods Transport Agency due to lack of consignment notes. Relief from service tax liability.

The Appellate Tribunal CESTAT Bangalore ruled in favor of the appellant, a transporter of food grains for government agencies, in a case concerning the ... GTA Service - consignment note not issued - Rule 2(l)(d)(v) of the Service Tax Rules, 1994 - Held that:- In the present case, the appellant does not fall in the definition of GTA as defined under the provisions of Section 65(105)(zzp) because he is not issuing any consignment receipt - the decision in the case of COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX VERSUS JAIKUMAR FULCHAND AJMERA [2016 (10) TMI 42 - CESTAT MUMBAI], is squarely applicable to the facts of the present case, where it was held that During the transportation stage, the respondent does not acquire any lien on the goods which is implicit in the issue of a consignment note. Therefore, no stretch of imagination can document issued by District Supply Officer conveying the goods transported be construed as a consignment note to render the respondent to be a goods transport agency. The appellant is not liable to pay the service tax in the light of the provisions of Rule 2(l)(d)(v) of the Service Tax Rules, 1994 because both the consignor and consignee fall under the category of specified categories and if any tax is to be paid, then the tax is to be paid by DC of Karwar and not the appellant. Appeal allowed - decided in favor of appellant. Issues:- Whether the appellant may be considered as a 'Goods Transports Agency' as defined under the provisions of Section 65(50b) of the Finance Act, 1994, and if the activity of the appellant is a taxable service as defined under the provisions of Section 65(105)(zzp) of the Finance Act, 1994Rs.- Assuming the appellant is a Goods Transports Agency, whether he is liable to pay the service tax as demanded in the circumstances where both the consignor and the consignee are specified persons under the provisions of Rule 2(l)(d)(v) of the Service Tax Rules, 1994Rs.Analysis:The appellant, engaged in transporting food grains for government agencies, challenged an order demanding service tax. The main contention was whether the appellant could be classified as a Goods Transport Agency (GTA) under the Finance Act, 1994. The appellant argued that he did not issue consignment receipts and, therefore, did not meet the criteria for a GTA. Citing a Tribunal decision, the appellant claimed that he should not be considered a GTA. The appellant further argued that even if considered a GTA, he was not liable to pay tax as both the consignor and consignee were specified persons under the Service Tax Rules, making the Deputy Commissioner liable for the freight tax.The Appellate Tribunal analyzed the evidence and previous judgments, concluding that the appellant did not meet the definition of a GTA as he did not issue consignment notes. Referring to a specific case, the Tribunal held that the issuance of a consignment note was crucial for a service provider to be classified as a GTA. The Tribunal rejected the circular logic used by the revenue authority to claim the appellant was a GTA. Additionally, the Tribunal emphasized that the goods transported were part of a public service distribution chain, and the appellant did not acquire any lien on the goods, thus not meeting the criteria for a GTA. Consequently, the demand for tax was deemed invalid.Moreover, the Tribunal found that the appellant was not liable to pay service tax under Rule 2(l)(d)(v) of the Service Tax Rules, 1994, as both the consignor and consignee were specified persons. Therefore, the Tribunal set aside the impugned order, ruling in favor of the appellant and relieving them of the service tax liability. The judgment was delivered on 08/06/2018 by the Appellate Tribunal CESTAT Bangalore, with detailed reasoning provided by the Judicial Member and Technical Member.