2026 (1) TMI 707 - AT - Service Tax

Whether goods transport/consignment services qualify as GTA/GTO and attract service tax; appellant not liable, extended limitation disallowed

Whether services rendered fall within GTA/GTO classification and thus taxable: Tribunal held that third-party Income Tax data alone, without independent ... Recovery of non-paid service tax with interest and penalty - demand on the basis of third Party data collected from the Income Tax Department for the year 2016-17 - appellant was liable to pay Service Tax as they are not “Goods Transport Agency” (GTA) within the meaning of Clause 26 of Section 65(B) of the Finance Act, 1994 or not - extended period of limitation - HELD THAT:- Merely raising a demand on the basis of 3rd Party information without appropriate investigation and verification of the factual position, cannot justify the levy and cannot be a sustainable ground alleging suppression of facts without any other corroborative evidence to support the said premise. The appellant had in the course of arguments submitted that the entire information as culled out by the authorities on the basis of the 3rd Party data, was already published information in their statutory records. GTO unlike the GTA has however been kept away from the ambit of taxnet. Section 67E(f) of the Finance Act clearly states the rendition of service only under the circumstance when “ transfer of goods by way of hiring, leasing, licencing or any such manner without transfer of right to use such goods”. No such aspect of leasing/hiring etc. emanates from facts on record. This new proposition as made out by the Learned Commissioner (Appeals) is required to be duly supported by tangible evidence which is lacking in the present matter. The appellant indeed is not a GTA and therefore as held by the Adjudicating Authority is also not liable to issue consignment notes. The present case is one clearly relating to the scope of levy of tax and the scope of exemption which was considered by the learned Adjudicating Authority by way of an alternate argument. The ld. Adjudicating authority has recorded elaborate findings thereto in the matter. A perusal of the same clearly brings out the fact of the appellant not being a GTA and hence not falling within the clutches of taxability. Further when the department itself is not clear under which category the service is rendered by the appellant, as evidenced by two diverse claims of classification by the two lower authorities, extended period of limitation would clearly be inapplicable. This Tribunal in the case of Maa Kalika Transport Pvt. Ltd. Vs. Commissioner of CGST & Central Excise, Rourkela [2023 (7) TMI 435 - CESTAT KOLKATA], has held that demand raised merely on the basis of data collected from Income Tax department without any corroborative evidence was certainly unsustainable. The Hyderabad Bench of the Tribunal in the case of Shriram Chits Pvt. Ltd. Vs. Commissioner of Central Excise, Customs & Service Tax, Hyderabad [2020 (1) TMI 187 - CESTAT HYDERABAD] has held that when no positive act of misstatement with intent to evade payment of duty was brought on record by the Revenue, there was no scope to allege suppression and thereby invoke the extended period of limitation. The Order of the Learned Appellate Authority is set aside being shorn of merits and unsustainable in the eyes of law - The order of the adjudicating authority is upheld and maintained - Appeal allowed. Issues: Whether the demand for Service Tax and invocation of extended period of limitation could be sustained where demand is founded on third-party (Income Tax) data without corroborative evidence, and whether the appellant's activities fall within the taxable category (GTA/GTO) or within the negative list/exemption.Analysis: The matter involves examination of (i) whether reliance solely on third-party information without independent investigation or corroboration can establish suppression of facts to invoke extended limitation, and (ii) whether the factual matrix supports classification of the appellant as a Goods Transport Agency taxable under the Finance Act, 1994 or as a Goods Transport Operator/exempt service falling within the negative list or specific exemption (including Notification No.25/2012-ST). The record shows absence of tangible evidence of hiring/leasing or transfer of right to use vehicles; the adjudicating authority had found the appellant not to be a GTA and noted exemption applicability where value per single carriage was below the specified threshold. The Appellate Authority's contrary conclusion rested on assumption without corroborative material and did not address the negative-list/section 66D(p) contention or apply section 66F principles on scope of levy; thus the conditions for extended limitation (suppression with corroboration) were not established.Conclusion: The order of the learned Appellate Authority is set aside; the adjudicating authority's order dropping proceedings is upheld and the appeal is allowed in favour of the assessee.