2009 (5) TMI 376 - AT - Service Tax

Manufacturers Not Liable for Service Tax as Goods Transport Agents

The Appellate Tribunal CESTAT, Bangalore, held in the 2009 (5) TMI 376 case that manufacturers transporting goods using their own vehicles and collecting ... Liability to pay service tax under Goods Transport Agency (GTA) vis-a -vis owner-carrier - interpretation of Rule 2(1)(d)(v) of the Service Tax Rules, 1994 - 'person liable to pay service tax' as confined to the person who pays or is liable to pay the freight - taxability of transportation service performed by the owner of the goods carriageLiability to pay service tax under Goods Transport Agency (GTA) vis-a -vis owner-carrier - interpretation of Rule 2(1)(d)(v) of the Service Tax Rules, 1994 - 'person liable to pay service tax' as confined to the person who pays or is liable to pay the freight - Whether the appellant, who transports its own goods in its own vehicle and where the buyer pays the freight, is liable to service tax as a Goods Transport Agent. - HELD THAT: - The Tribunal applied the ratio of its earlier decision in MSPL Ltd. v. CCE, holding that the legislative intent and the statutory scheme tax only services provided by a Goods Transport Agent and not by the owner-carrier. Rule 2(1)(d)(v) identifies the person liable to pay service tax in relation to GTA services as the person who pays or is liable to pay the freight. In the present facts the buyer is the person who actually pays the freight. Consequently the appellant, being the owner-carrier who used its own vehicle to transport the goods, is not the person liable under the rule and therefore has no liability to pay service tax as a GTA. The Tribunal further held that the Commissioner (Appeals) was correct in setting aside the original order and that there was no need for remand. [Paras 2, 3]Appeal allowed; stay petition disposed of; appellant held not liable to service tax as a GTA and granted consequential relief.Final Conclusion: The appeal was allowed following the Tribunal's earlier ratio: where the owner transports goods in its own vehicle and the buyer pays the freight, the owner is not liable to service tax as a Goods Transport Agent; consequential relief granted and no remand necessary. The Appellate Tribunal CESTAT, Bangalore, in the 2009 (5) TMI 376 case, comprised of T.K. Jayaraman, Technical Member and M.V. Ravindran, Judicial Member. The appellants, manufacturers of gases, were transporting gas cylinders to buyers using their own vehicle and collecting freight charges. The revenue argued that the appellants were liable for service tax as Goods Transport Agents (GTAs). However, the Tribunal referenced a previous case and ruled that only the person who pays the freight is liable for service tax, which in this case was the buyer. Therefore, the appellants were not liable for service tax. The Tribunal allowed the appeal and disposed of both the stay application and appeal accordingly. This judgment clarifies the liability for service tax in cases where goods are transported by the owner's own vehicle.