2021 (5) TMI 440 - AT - Service Tax

Transporters' Failure to Issue Consignment Notes Absolves Appellant of Service Tax Liability

The Tribunal ruled in favor of the appellant, finding that the transporters did not issue consignment notes as required under Rule 4B, absolving the ... Levy of service tax on freight charges - GTA Services - Goods Transport Agency or not - Appellant being manufacturer - No consignment note was issued by any of the transporters - consignment notes as per Rule 4B of the Rules - HELD THAT:- In the premises, as per legal principles decided by different Benches of the Tribunal, delivery of the goods by the transporters in the instant case does not fall under GTA services in terms of Section 65(105)(zzp) of the Act. Consequently, the said transporters cannot be said to be “Goods Transport Agency” within the meaning of Section 65(50b) of the Act. As per legal principles decided by different Benches of the Tribunal, delivery of the goods by the transporters in the instant case does not fall under GTA services in terms of Section 65(105)(zzp) of the Act. Consequently, the said transporters cannot be said to be “Goods Transport Agency” within the meaning of Section 65(50b) of the Act. - Reliance can be placed in the case of M/S. EAST INDIA MINERALS LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS & SERVICE TAX, BHUNANESWAR-II [2020 (3) TMI 851 - CESTAT KOLKATA]. The impugned order of the lower appellate authority is unsustainable - Appeal allowed - decided in favor of appellant. Issues Involved:1. Liability of service tax on freight charges under GTA services.2. Validity of consignment notes as per Rule 4B of the Service Tax Rules, 1994.3. Applicability of extended period of limitation under Section 73(1) of the Finance Act, 1994.Detailed Analysis:1. Liability of Service Tax on Freight Charges under GTA Services:The appellant, engaged in manufacturing Kraft Paper, used local transporters to deliver goods. The transporters issued bills/invoices but did not provide consignment notes. An audit by CERA raised objections, demanding service tax on transport charges for 2009-10 to 2011-12, claiming the services were GTA services. The appellant denied liability, arguing that the transporters did not issue consignment notes, which is a requirement under Rule 4B of the Service Tax Rules, 1994.2. Validity of Consignment Notes as per Rule 4B of the Service Tax Rules, 1994:The appellant contended that the transporters did not issue consignment notes, which are mandatory under Rule 4B. The bills/invoices lacked details such as consignor and consignee names, origin and destination, and were not serially numbered. The Commissioner (Appeals) erroneously treated the challans and bills/invoices together as consignment notes, which was beyond the scope of Rule 4B. The Tribunal cited several decisions, including East India Minerals Ltd. and JWC Logistics Pvt. Ltd., confirming that without consignment notes, the transporters cannot be classified as a 'Goods Transport Agency' under Section 65(50b) of the Finance Act, 1994.3. Applicability of Extended Period of Limitation under Section 73(1) of the Finance Act, 1994:The appellant argued that the demand for the period April 2009 to September 2011 was time-barred as the show cause notice was issued beyond the normal period. The Tribunal agreed, referencing decisions like Uniworth Textiles Ltd. and Continental Foundation Jt. Venture, which held that extended periods cannot be invoked without evidence of suppression or intent to evade tax.Conclusion:The Tribunal found that the transporters did not issue consignment notes as required under Rule 4B. Consequently, the appellant was not liable for service tax under GTA services. The extended period of limitation was also inapplicable. Therefore, the Tribunal set aside the impugned order, allowing the appeal with consequential relief.(Pronounced in the open court on 12 May 2021.)