The Customs, Excise and Service Tax Appellate Tribunal Chennai, ruled that transporters are not considered goods transport agency therefore the service tax demand is unjustified.
Facts
It is the case of the Revenue, through the Show Cause Notice, that during the course of audit of accounts, the assessee appeared to have engaged the services of various contractors for transportation of limestone from the mines to their factory which was covered under the category of Goods Transport Agency (GTA) under Section 65(105)(zzp) of the Finance Act, 1994 read with Section 65(50b).
It is also their case that as per sub-rule 2(1)(d)(v) of the Service Tax Rules, 1994, the person liable for paying Service Tax on the transportation service provided by a GTA in cases where the consignor or consignee of goods falls under any of the seven subclauses under the said sub-rule, is the person who pays or is liable to pay freight for the transportation of such goods, which in the instant case having been made by the assessee, therefore, the assessee was liable to pay Service Tax.
Submission
R. Parthasarathy, Consultant, appeared for the appellant, submitted, that the transportation of limestone was undertaken by transport operators who were actually the owners of such trucks, with whom the appellant had directly entered into contract for transportation, such transport operators were not covered by the definition of GTA and hence, the appellant entertained a bona fide doubt that there was no liability to pay Service tax on the freights that were paid directly to such transport operators / truck owners.
Decision
The division bench of P. Dinesha, Member (Judicial) and M. Ajit Kumar, Member (Technical) found that the other orders relied upon by the Consultant clearly confirmed the view that the essential requirement is the issuance of consignment note in order to be covered under the definition of GTA and in the absence of the same, the transporters/contractors rendering transport services in mines cannot be said to be GTA and therefore, their service cannot be made amenable to the levy of Service Tax under the category of ‘transportation of goods by road’ service.
The bench observed the consistent view expressed by various co-ordinate benches of the CESTAT, judicial discipline demands to follow the said view of the co-ordinate Benches. This is also for the reason that in one of the cases, even the jurisdictional High Court has upheld the order of this Bench.
Following the same view, the Tribunal held that the demand of Service Tax confirmed in the impugned order cannot sustain.
Case title: M/s. The Ramco Cements Limited v/s Commissioner of Central Excise
Citation: Service Tax Appeal No. 40585 of 2014
