M/S. Maruti Supertouch Pvt. Ltd vs Commissioner Of Service Tax-II, Mumbai

Dr. Suvendu Kumar Pati, Member (J)

Confirmation of Service Tax demand of Rs.1,34,967/- through three show-cause notices for the period from 2004-05 to 2010-11 and order for its recovery under Section 73 of the Finance Act with interest under Section 75 of the Finance Act, penalty of Rs. 10,000/-under Section 77 of the Finance Act, 1994 for not filing periodic returns and equal penalty under Section 78 of the Finance Act, 1994 by invoking extended period, by the adjudicating authority that received approval of the Commissioner (Appeals) Service Tax-II, Mumbai Zone by way of partial rejection of appeal of the Assessee/Appellant and acceptance of it only to the extent of setting aside penalty under Section 78 in respect of show-cause notices dated 18.10.2010 and 12.08.2011 for an amount of Rs.15,110/- and Rs.23,621/- respectively on the ground that demand was raised only for the normal period, has been assailed by the Assessee/Appellant in this appeal to the extent it is adversely affected.

Facts of the case, in a nutshell, is that Appellant is a recipient of services of truck operators/owners for transportation of its goods. Truck owners were not issuing any consignment note while lifting the goods of the Appellant as Appellant was paying hiring charges on monthly basis through monthly bills. During the course of EA Audit, 2000 it was pointed out in the audit report that Appellant was receiving ‘Goods Transport Agency Services’ and accordingly duty demand for the above referred period for the aforesaid amount was made through show cause-cum-demand notice that was adjudicated and decided against the Appellant and the said order was also confirmed against him by the Appellate Authority. Appellant challenged the legality of the said confirmation order before this Tribunal.

During the course of hearing of the appeal, learned Counsel for the Appellant Mr. H.G. Dharmadhikari argued that truck owners were issuing monthly bills and not carrying consignments under consignment note issued by them as stipulated in Rule, 4B of the Service Tax Rules, 1994 for which they were supposed to be treated as goods transport operators, in which case Service Tax was not levialbe even under reverse charge mechanism in view of the judgment of the Hon'ble Apex Court passed in the case of Laghu Udyog Bharati Vs. UOI reported in 1999 (112) ELT 365 (SC) for which levy on transport operators that was introduced vide Notification No. 05/1999-ST dated 28.02.1999 was withdrawn. He pointed out that again in 2004 Service Tax was introduced on ‘Goods Transport Agency’ (GTA) w.e.f. 10.09.2004 by adding sub-Clause 50b to Section 65 of the Finance Act, 1994 and both the definition under sub-Clause 50b as well as Rule 4B clearly mentioned about issue of consignment note by the GTA and in the nature of description of consignment note as available under explanation to Rule 4B, it has been clearly mentioned that it would be issued by the GTA against receipt of goods for the purpose of transportation of goods by roads in a goods carriage, which is to be serially numbered and must be containing name of the consignor as well as consignee with registration number, goods carriage and description of the goods transported etc. which provision would not be applicable to the Appellant for the reason that it had hired vehicles either on hourly basis or for full or half day with certain charges and was issued with invoices by the transport vehicle owners on monthly basis. In support of his stand, he has drawn attention of this Bench to sample invoices attached to the appeal memo at page 210 onwards. In citing case laws of this Tribunal decided in the case of Birla Ready Mix reported in 2013 (30) STR 99 (Tri.-Delhi), Nandganj Sihori Sugar Co. Ltd. reported in 2014 (34) STR 850 (Tri.-Delhi), Bhima Sahakari Karkhana Ltd. Vs. CCE, Pune-III reported in 2016 (41) STR 438 (Tri.-Mumbai) etc., he further argued that submission of fortnight bills, as in the case of Nandganj Sihori Sugar Co. Ltd., cited supra or that of the monthly bill as in the case of present Appellant, cannot be considered as consignment notes to attract Service Tax on GTA and the findings of the Commissioner (Appeals) on the basis of Challan number referred in the invoice, treating the same as consignment note, is unsustainable in both law and facts, for which the order passed by the Commissioner (Appeals) is required to be set aside.

In response to such submissions, learned Authorised Representative for the Respondent-Department Mr. Ajay Kumar Shrivastava argued in support of the reasoning and rationality of the order passed by the Commissioner (Appeals) and stated that on thorough examination of all relevant points, Commissioner (Appeals) had even dropped penalty under Section 78 of the Finance Act, 1994 in respect of two show-cause notices, for which interference by the Tribunal in the order passed by the Commissioner (Appeals) is uncalled for.

We have perused the case record, relied upon judgements, sample copies of invoices and also the written note of submission filed by learned Counsel for the Appellant. It would not be out of place to refer to the written submission of the learned Counsel in which the development of law in respect of Service Tax on transport services have been clearly reproduced bringing out distinction between the ‘Goods Transport Operators’ and ‘Goods Transport Agency’ (GTA). Appellant’s contention is that it had received services from Goods Transport Operators against which payment of Service Tax under reverse charge mechanism was not only struck down by the Hon'ble Supreme Court in Laghu Udyog Bharati decision, cited supra but the notification vide which such duty was levied, had been withdrawn by the Government of India and at no point of time the services used by the Appellant could be considered as services received from the Goods Transport Agency, in which case if duty was payable through the transport agency or under reverse charge mechanism, the bearing of tax liability would be on the Appellant himself, that would have resulted in a revenue neutral situation apart from the fact that low turnover in the entire period of 5 years is a sufficient indication that abatement could have been taken as an alternate plea for seeking exemption from tax liability, had the activities of the Appellant been covered under taxable service which going by the judgment of this Tribunal passed in the case of Nandganj Sihori Sugar Co. Ltd., cited supra is held to be not taxable. Therefore, in carrying forward the judicial precedent set by this Tribunal and in order to ensure consistency and predictability to the order passed by it, the following order is passed.

THE ORDER

The appeal is allowed and the order passed by the Commissioner (Appeals) Service Tax, Mumbai-II vide Order-in-Appeal No. MUM-SVTAX-002-APP-198-15-16 dated 02.03.2016 to the extent of confirmation of demand, interest and penalty is hereby set aside with consequential relief, if any.