Tribunal overturns service tax demand on Goods Transport Agency; appellant not liable

The Tribunal set aside the order confirming service tax demand on Goods Transport Agency Service for the period 2007-2008 to 2011-2012, along with penalties, ruling that the appellant was not liable for the service tax on transportation charges collected from NTPC. It was held that the appellant's role primarily involved supplying goods and services, including transportation, and that if such service was provided, NTPC would be responsible for the service tax. Consequently, the demand was deemed unsustainable, and relief was granted to the appellant.

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Issues involved:
The appeal challenges an order confirming service tax demand on Goods Transport Agency Service for the period 2007-2008 to 2011-2012, along with penalties imposed on the appellant.

Details of the judgment:

Issue 1: Nature of Services Provided
The appellant, a subsidiary of a Russian company, engaged in services related to power generation plants and was registered with the service tax department for providing various services. The appellant entered into contracts with NTPC for setting up power projects, which included transportation of equipment to the site. The appellant invoiced NTPC for transportation charges at 2% of the goods' value, regardless of the actual transport cost incurred.

Issue 2: Liability for Service Tax
The appellant hired other transporters for goods transportation and paid service tax as a recipient of the service. However, show cause notices were issued demanding service tax on the 2% transportation charges collected from NTPC. The appellant contested the liability for service tax, arguing that it did not issue any consignment note and that as per the rules, the recipient of service (NTPC) should be liable to pay service tax for Goods Transport Agency Services.

Issue 3: Applicability of Penalties and Interest
The appellant raised various grounds for appeal, including the applicability of penalties and interest. It argued against the sustainability of the demand and interest, citing provisions under section 80 of the Act regarding reasonable cause for failure.

Judgment Summary:
The Tribunal considered the submissions and records, focusing on whether the appellant was liable to pay service tax for Goods Transport Agency Service on the 2% transportation charges collected from NTPC. It was observed that the appellant's role was primarily related to supplying goods and providing services, including transportation to the site. The Tribunal concluded that the appellant was not providing Goods Transport Agency Service to NTPC and that if such service was provided, NTPC would be liable for service tax, not the appellant. Therefore, the impugned order confirming the demand was deemed unsustainable and set aside, granting consequential relief to the appellant.

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