2025 (3) TMI 1103 - AT - Service Tax

Transportation service provider exempt from service tax; not a GTA under Finance Act, 1994. Section 66D exemption applies.

M/s Kalyani Transco Versus Commissioner of CGST & Central Excise, Rourkela

The Court determined that the appellant, a transportation service provider, is not liable to pay service tax as they do not qualify as a Goods Transport ... Levy of service tax on transportation service providers where consignment note is not issued - invocation of extended period of limiattion - penalty - HELD THAT:- Admittedly, the ld.Adjudicating Authority found that the appellant is not the GTA. In that circumstances, the appellant is not liable to pay service tax under Section 66D (p) of the Act., which exempts services by way of transportation of goods by road except the services of goods transportation agency or courier agency. Admittedly, it has been held that the appellant is not the Goods Transport Agency, therefore, the said service falls under negative list as per Section 66D (p) of the Finance Act, 1994. The appellant is not liable to pay service tax. In such circumstances, the service recipient is liable to pay service tax under reverse charge mechanism, but as the service recipients are not present, therefore, no comments passed against service recipient whether they have paid the service tax or not. Conclusion - The demand of service tax against the appellant on transportation of goods by road, who has not issued consignment note and being not GTA, is not liable to pay service tax, therefore, whole of the demand of service tax is set aside. Consequently, no penalty is imposable on the appellant. The impugend order set aside - appeal allowed. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment are:Whether the appellant, a transportation service provider, is liable to pay service tax under the Finance Act, 1994, in the absence of issuing consignment notes.Whether the extended period of limitation for issuing the show-cause notice is applicable in this case.Whether the services provided by the appellant fall under the category of 'Goods Transport Agency' (GTA) as per the relevant legal provisions.Whether the appellant's services are exempt from service tax under the negative list provided in Section 66D of the Finance Act, 1994.ISSUE-WISE DETAILED ANALYSIS1. Liability to Pay Service Tax Without Consignment NotesRelevant legal framework and precedents: The appellant argued that the issue of service tax liability for transportation services without issuing consignment notes is settled in favor of service providers like them, relying on several precedents from various CESTAT benches.Court's interpretation and reasoning: The Court noted that the appellant, being a proprietorship concern, did not issue consignment notes. The adjudicating authority recognized this fact and determined that the appellant does not qualify as a Goods Transport Agency (GTA) under Section 65B(26) of the Finance Act, 1994.Application of law to facts: The Court applied the legal framework to the appellant's situation, concluding that since the appellant is not a GTA, it is not liable to pay service tax under Section 66D(p), which exempts transportation of goods by road services from service tax, except those provided by a GTA or courier agency.2. Applicability of Extended Period of LimitationRelevant legal framework and precedents: The show-cause notice was issued by invoking the extended period of limitation on the grounds of alleged suppression of facts with the intent to evade tax.Court's interpretation and reasoning: The appellant contended that the extended period should not apply as they had been filing returns regularly. The Court did not find sufficient grounds for invoking the extended period, given the circumstances and the appellant's compliance with return filings.3. Classification as Goods Transport AgencyRelevant legal framework and precedents: The classification of services under 'Goods Transport Agency' is crucial for determining tax liability. The appellant provided evidence that they did not issue consignment notes, a requirement for classification as a GTA.Court's interpretation and reasoning: The Court, agreeing with the adjudicating authority, found that the appellant's services did not meet the criteria for a GTA as per the relevant legal provisions, specifically Clause (26) of Section 65B.Application of law to facts: The Court concluded that since the appellant is not classified as a GTA, their services fall under the negative list, exempting them from service tax liability.4. Exemption Under the Negative ListRelevant legal framework and precedents: Section 66D of the Finance Act, 1994, lists services exempt from service tax. The appellant argued that their services are covered under this negative list.Court's interpretation and reasoning: The Court agreed with the appellant, noting that their services, not being provided by a GTA, fall under the exemption provided by Section 66D(p).SIGNIFICANT HOLDINGSCore principles established: The judgment reinforces the principle that transportation service providers not issuing consignment notes and not qualifying as GTAs are exempt from service tax under the negative list.Final determinations on each issue: The Court concluded that the appellant is not liable to pay service tax, and the demand against them is set aside. The invocation of the extended period of limitation was deemed inappropriate, and no penalties were imposed.The appeal was allowed, and the impugned order was set aside, with consequential relief granted to the appellant.