2023 (7) TMI 883 - AT - Service Tax

Truck hiring for goods transport and consignment note responsibility-treated as non-taxable under s. 66D; demand set aside

The dominant issue was whether the appellant's activity constituted taxable goods transport agency (GTA) service or was covered by the negative ... Classification of services - transportation services - Declared service or not - benefit of entry of Section 66D (p)(i)(A) of the Finance Act, 1994 denied - denial on the ground that Appellant has not provided the services of transportation of goods by road to M/s FCPL, but they have provided services of supply of vehicles to M/s FCPL - extended period of limitation - HELD THAT:- For the truck provided by M/S chartered logistic the GTA service was provided by Fine Tech Corporation Pvt. Ltd. who have issued the consignment note therefore the services provided by the appellant to M/S FCPL does not fall under the category of GTA service even though the appellant have provided service of transportation of goods for the reason that the service of transportation provided by the appellant is to the GTA and for the said service consignment note was issued by FCPL to its client M/S Reliance Industries Ltd. therefore, for the entire activity that is transportation of goods by the appellant to FCPL for which the consignment note was issued by FCPL the GTA service provider is FCPL to its client M/S Reliance industries Ltd. Therefore, the activity of the appellant is clearly covered under section 66D (p)(i)(A) of the finance act,1994 which clearly falls under negative list of services which is not taxable. Now it is a settled law that even if a person has provided Goods Transport Service but not issued consignment note/LR, Service Tax from that person under GTA cannot be recovered - From the decision in M/S. NARENDRA ROAD LINES P. LTD. AND HARI MOHAN GARG VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE & CENTRAL GST, AGRA [2022 (3) TMI 803 - CESTAT ALLAHABAD] and M/S. MAHANADI COALFIELDS LTD. VERSUS COMMR. OF CENTRAL EXCISE & SERVICE TAX, BBSR-I [2019 (7) TMI 1803 - CESTAT KOLKATA], it is settled that a person even if provides Goods Transportation service but if he does not issue Consignment Notes/LR, he cannot be brought under the ambit of GTA. The case of the appellant is on much better footing on the admitted fact that the appellant’s client FCPL is in fact the GTA who issued ‘Consignment Note’ in respect of the Transportation Service provided to M/s Reliance Industries Ltd. Therefore, appellant is not liable to pay Service Tax. From provision of Sr. No. 22 of the Notification No. 25/2012-ST dated 20.06.2012, it is found that the services of providing vehicles on hire basis to GTA is covered under above Entry and this entry exempts the services by way of giving on hire a means of transportation of goods to a goods transport agency. Even if the contention of the revenue is accepted that the Appellant are not providing the transport of goods services to M/s FCPL and providing the vehicles on hire basis, the demand of service tax still not sustainable in the present matter - in the present matter FCPL has issued consignment notes/ LRs for transportation of goods, hence M/s FCPL is clearly covered under the definition of Goods Transport Agency Service and if at all there is any Service Tax liability it is on the service recipient of FCPL i.e. M/s Reliance Industries Ltd. - there are no reason for denying the benefit of the exemption under this entry to the appellant. Extended period of limitation - HELD THAT:- When an assessee under a bonafide belief claims any exemption, in the present case on the basis of negative list, than it is incumbent on the department to strictly examine the admissibility of such exemption. Once the assessee has declared as per their belief that the service falls under negative list and the same has been declared in their ST-3 return, it cannot be said that there is a suppression of the fact on the part of the appellant. In the present case the appellant have acted legitimately by entering in to legal contract with their service recipient M/s FCPL. All the transaction were recorded in their books of account and all documents such as invoices for their services were issued. Moreover, the issue involved in the present case is strict interpretation of the taxable service - extended period of limitation could not have been invoked - the demand for the extended period is not sustainable on limitation also. The demand of Service tax, interest and penalty is not sustainable and the same is accordingly set aside - Appeal allowed. Issues Involved:1. Classification of services provided by the appellant.2. Eligibility for exemption under Notification No. 25/2012-ST.3. Applicability of the Negative List under Section 66D of the Finance Act, 1994.4. Invocation of the extended period of limitation for demanding service tax.Summary:1. Classification of Services:The appellant provided services related to 'managing distribution and logistics' and 'operational or administrative assistance' in business to M/s Reliance Supply Chain Solution Ltd. and M/s Fine Tech Corporation Pvt. Ltd. The services included transportation, vehicle upkeep, pilferage checks, and provision of drivers/supervisors. The department classified these services under 'supply of tangible goods for use' as defined under Section 66(E)(f) of the Finance Act, 1994, and issued a show cause notice demanding service tax along with interest and penalty.2. Eligibility for Exemption:The appellant argued that the services were exempt under Entry No. 22(b) of Notification No. 25/2012-ST, as they were provided to a Goods Transport Agency (GTA). The appellant provided transportation services using vehicles, and M/s Fine Tech Corporation issued consignment notes (LRs). The Tribunal found that M/s Fine Tech Corporation qualified as a GTA, and thus, the appellant was entitled to the exemption under Entry No. 22(b).3. Applicability of the Negative List:The appellant contended that their services fell under the Negative List as per Section 66D (p)(i) of the Finance Act, 1994, which exempts services by way of transportation of goods by road, except those provided by a GTA or courier agency. The Tribunal agreed, noting that the appellant did not issue consignment notes, and M/s Fine Tech Corporation, which issued the consignment notes, was the GTA. Therefore, the appellant's services were covered under the Negative List and were not taxable.4. Invocation of Extended Period of Limitation:The appellant argued that there was no intention to evade tax or suppression of facts, and thus, the extended period of limitation should not apply. The Tribunal found that the appellant had declared their services under the Negative List in their ST-3 returns, and there was no willful misstatement or suppression. The Tribunal cited various judgments supporting this view and concluded that the demand for the extended period was not sustainable.Conclusion:The Tribunal set aside the demand for service tax, interest, and penalties, allowing the appeal with consequential relief. The services provided by the appellant were exempt under the Negative List and Notification No. 25/2012-ST, and the extended period of limitation was not applicable due to the absence of willful suppression or misstatement.