Reverse Charge for Goods Transport Agency services not proven; confirmed demand set aside as barred by limitation period.

Whether service tax under the reverse charge mechanism applied to payments to Goods Transport Agencies and whether the demand was time barred were the central issues. The analysis records that payments to individual truck owners were evidenced and excluded, while payments to goods transport agencies lacked rebuttal evidence of agency services. However, because ledgers were maintained, audited and there was no finding of suppression with intent to evade tax, invocation of the extended period of limitation was unsustainable. Operatively, liability on payments to GTAs was not established by rebuttal and the confirmed demand was set aside as barred by limitation in favour of the assessee.

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Issues: (i) Whether the appellants were required to discharge service tax on Goods Transport Agency (GTA) services on reverse charge mechanism for the period 01.01.2005 to 31.03.2008; (ii) Whether the demand confirmed by adjudicating authority is barred by limitation.

Analysis: Records show payments were made both to individual truck owners and to goods transport agencies. Evidence of services received from individual truck owners was produced and the learned Commissioner (A) allowed deduction for amounts attributable to individual truck operators. No evidence was placed on record to rebut payments made to goods transport agencies. All freight payments were recorded in the appellant's ledgers and the accounts were periodically audited. The show-cause notice was issued on 15.06.2009 and the demand was confirmed for periods falling within the extended period of limitation. In view of the maintained books and absence of any finding of suppression with intent to evade tax, invocation of the extended period of limitation was not sustainable.

Conclusion: The liability to pay service tax under reverse charge for amounts paid to goods transport agencies is not established with rebuttal evidence; however, the confirmed demand is set aside on the ground of limitation. The result is in favour of the assessee.

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