2022 (3) TMI 1214 - AT - Service Tax

Service Tax Demand Overturned: Tribunal Rules in Favor of Mining Firm Due to Lack of Consignment Notes and Good Faith.

The CESTAT set aside the impugned orders, ruling that the service tax demand under 'Goods Transport Agency Services' was unsustainable against the ... Non-payment of service tax - Goods Transport Agency Service - issuance of consignment note or not - Revenue is of the view that appellant has availed the services of transport of goods but have not paid service tax being recipient of the service - period 20/02/2005 to March 2006 - HELD THAT:- In the appellant own case DODDANAVAR BROTHERS VERSUS C.C.,C.E. & S. T-BELGAUM [2020 (1) TMI 590 - CESTAT BANGALORE] where it was held that If we see the definition of “Goods Transport Agency”, it clearly shows that the services must be provided by a person in relation to transport of goods by road and issues consignment note, “by whatever name called” whereas in the present case, we find that no consignment note was issued. In the case of South Eastern Coalfields Ltd. [2016 (8) TMI 677 - CESTAT NEW DELHI], after considering the definition of ‘Goods Transport Agency’ as provided in Section 65(50b) and after considering the various decisions given by the Tribunal, has allowed the appeal of the assessee by holding that the tax liability under ‘Goods Transport Agency’ service cannot be sustained. The demand of service tax is not sustainable against the appellant - appeal allowed - decided in favor of appellant. Issues Involved:1. Demand of service tax under the category of 'Goods Transport Agency Services'.2. Issuance of consignment notes by the transport service providers.3. Applicability of the extended period for demand.Issue-Wise Detailed Analysis:1. Demand of Service Tax under 'Goods Transport Agency Services':The appellant, a partnership firm engaged in mining activities, was availing the services of Goods Transport for transporting iron ore by road. The Revenue issued two show-cause notices for the period from 20/02/2005 to March 2006, demanding service tax under the category of 'Goods Transport Agency Services'. The appellant argued that in their earlier case (2020-TIOL-103-CESTAT-BANG), the Tribunal had dropped a similar demand, following the decision in the case of Lakshminarayana Mining Company (2019-TIOL-1833-CESTAT-BANG). The Tribunal noted that the appellant had availed transport services from transport owners/operators, but the Revenue failed to establish that a consignment note was issued by the Goods Transport Agency. According to Section 65(50b) and Section 65(105)(zzp) of the Finance Act, 1994, the issuance of a consignment note is a crucial element for a service to be classified under 'Goods Transport Agency Services'.2. Issuance of Consignment Notes by Transport Service Providers:The Tribunal emphasized that the definition of 'Goods Transport Agency' requires the service provider to issue a consignment note. In the appellant's case, no consignment note was issued, which is a prerequisite for the service to be taxable. This was consistent with previous judgments, such as Commissioner of Central Excise, Guntur vs. Kanaka Durga Agro Oil Products Pvt. Ltd., which excluded individual truck owners from the tax purview if they did not issue consignment notes. The Tribunal reiterated that the issuance of a consignment note signifies the acceptance of responsibility for the cargo, which was not the case here. The Tribunal also referenced the case of Bhima Sahakari Sakhar Karkhana Ltd., where it was held that payments made to individual truck owners without issuing consignment notes did not attract service tax under 'Goods Transport Agency Services'.3. Applicability of the Extended Period for Demand:The Tribunal found that the extended period for demand was wrongly invoked. The appellant had not suppressed any material facts from the Department, and the issue was contentious with contrary decisions during the relevant period. The appellant had a bona fide belief that they were not liable to pay service tax as they engaged truck operators for transporting goods by road. The Tribunal concluded that the Departmental Representative's reliance on certain case laws was not applicable to the facts of the present case, as those decisions did not discuss the necessity of consignment notes in detail.Conclusion:The Tribunal set aside the impugned orders, holding that the demand of service tax was not sustainable against the appellant. The appeals were allowed with consequential relief, if any, and the operative portion of the order was pronounced in the open court on 3/03/2022.