Service Tax Upheld on Freight Charges for Styrene Monomer Transportation

The Tribunal upheld the demand of service tax on freight charges for transportation of imported Styrene Monomer, ruling that the transportation was taxable under the reverse charge mechanism as the transport contractor provided dedicated tankers for the service, constituting Goods Transport Agency Services. The appellant's argument that the tankers were procured from individual owners and not subject to tax was dismissed. The appeal was rejected, affirming the lower authorities' decision to impose interest and penalty under Section 76 of the Finance Act, 1944.

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Issues:
Demand of service tax on freight charges for transportation of imported Styrene Monomer.

Analysis:
The appeal in this case was against the demand of service tax on the amounts paid as freight charges for the transportation of imported Styrene Monomer. The appellant used the imported Styrene Monomer as raw material for manufacturing, importing it in bulk and storing it in shore tanks in the port area. Tankers were hired to transport this raw material to the factory. The Revenue contended that the amount paid for transportation through tankers was taxable under the reverse charge mechanism. The Adjudicating Authority and the First Appellate Authority confirmed the demands raised, imposed interest, and penalty under Section 76 of the Finance Act, 1944.

The appellant argued that the tankers used for transportation were procured from individual owners and should not be considered as a Goods Transport Agency. The appellant relied on previous tribunal decisions to support this argument. However, the Departmental Representative supported the findings of the lower authorities.

Upon reviewing the submissions, it was found that the appellant had a contract with a transport contractor for the movement of Styrene Monomer from the port to the factory. The terms of the agreement specified the use of dedicated tankers provided by the contractor for the transportation, indicating the contractor's engagement in Goods Transport Agency Services. The claim that the tankers were supplied by individuals and not taxable under GTA was deemed incorrect. The contract clearly showed that the transport contractor was engaged in providing Goods Transport Agency Services, making the transportation taxable.

The Tribunal upheld the impugned order, stating that it was correct, legal, and without any infirmity. The appeal was rejected, and the order was pronounced in open court on 12/09/2018.

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