Custom, Excise & Service Tax Tribunal
Bannari Amman Sugars Ltd vs Salem on 28 May, 2024
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
SOUTH ZONAL BENCH, COURT HALL No.III
SERVICE TAX APPEAL No.40737 of 2015
(Arising out of Order-in-Appeal No.04/2014-ST, dated 08.01.2015 passed by
Commissioner of Central Excise (Appeals), No.1, Foulk's Compound, Anai Road, Salem
636 001).
M/s. Bannari Amman Sugars Limited ...Appellant
(Distillery Division)
SF No. PR-21, Sinnapuliyur
Periyapuliyur Post
Kavindapadi
Erode 638 455
Versus
The Commissioner of Central Excise ...Respondent
No.1, Foulks Compound, Anai Road,
Salem 636 001
APPEARANCE:
Shri J. Shankara Raman, Advocate for the Appellant
Shri N. Satyanarayanan, Authorised Representative for the Respondent
CORAM :
HON'BLE MS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL)
HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL)
FINAL ORDER No.40549/2024
Date of Hearing :09.05.2024
Date of Decision: 28.05.2024
ORDER :Per Ms. SULEKHA BEEVI C.S. Brief facts are that the appellant is manufacturer of Denatured Spirit and Rectified Spirit and holds Service Tax registration under the category of transport of goods by road 2 service. They filed a refund claim for an amount of Rs.36,39,204/- being the Service Tax paid for the period from June 2010 to July 2013 in respect of freight paid to M/s. Shiva Cargo Movers Ltd., who transported finished goods. The refund sanctioning authority vide Order in Original dated 21.08.2014 held that as the service tax has been correctly paid, the appellant is not eligible for refund. Against such order, the appellant filed appeal before the Commissioner (Appeals) who upheld the order of rejection of refund. Hence this appeal.
2. The learned counsel Shri J. Shankara Raman appeared and argued for the appellant. It is submitted that the raw materials and finished products of the appellant company was transported by M/s. Shiva Cargo Movers Ltd. The appellant paid service tax on the charges paid to M/s. Shiva Cargo Movers Ltd. on reverse charge mechanism as a service recipient for the period from June 2010 to July 2013. M/s. Shiva Cargo Movers Ltd., do not fall within the definition of goods transport agency as under Section 65 (50 b) of Finance Act, 1994 for the reason that they are owners of lorries. Being the owners of the trucks used for transportation of goods, M/s. Shiva Cargo Movers is not liable to pay Service Tax. When the provider of service is not liable to pay service tax, the appellant, ought not to have paid tax under reverse charge mechanism. The appellant therefore had filed the above refund claim for refund of the service tax paid on freight charges paid to M/s. Shiva Cargo Movers.
3. The department has taken the view that M/s. Shiva Cargo Movers Ltd., issued invoices to the appellant containing the ingredients of the consignment note quoting the cost of transportation. That therefore, according to Section 65 (50 b) M/s. Shiva Cargo Movers Ltd., would fall within the definition of goods transport agency. The adjudicating authority as well as the 3 Commissioner (Appeals) held that M/s. Shiva Cargo Movers Ltd., will fall within the definition of goods transport agency and that the appellant has therefore correctly discharged the service tax under reverse charge basis. It was also observed by the department that vide Notification No.35/2004 dated 03.12.2004, M/s. Shiva Cargo Movers Ltd., being a company registered under the Company's Act is liable to pay service tax for transportation of goods on road.
4. It is submitted by the Ld. Counsel that the department has not considered the issue correctly. M/s. Shiva Cargo Movers Ltd., is not a Goods Transport Agency, though they are the group company of the appellant. M/s. Shiva Cargo Movers Ltd., own a fleet of tanker lorries and these vehicles were hired for transportation of the goods of the appellant. M/s. Shiva Cargo Movers Ltd., did not issue any consignment note. They have merely issued invoices showing the vehicle number and the cost of transportation. The said document is not a consignment note and is not a document in accordance of Rule 4 B of the Service Tax Rules 2004. This being so, M/s. Shiva Cargo Movers Ltd., is not liable to pay service tax and the service tax paid by the appellant under protest on reverse charge basis ought to be refunded.
5. The Learned counsel relied upon the decision in the case of Lakshmi Narayana Mining Company Vs. Commissioner of Central Tax, Bengaluru South GST (2019 (27) G.S.T.L. 745 (Tri. - Bang.). It is submitted that in the said case the demand was made against the appellant therein alleging to be a recipient of goods transport agency service. There was no agency function (GTA) involved as the goods were loaded on vehicles hired by the appellant therein. There was no third party involved for transportation of the goods. The Tribunal held that the tax liability under Section 65 (105) (zzp) would arise only when transportation is done by goods transport agency. A GTA undertakes the 4 responsibility, in full legal sense for the cargo despatch by it. Conversely, in the case of an individual truck operator, there is no responsibility caused for the carriage of the goods and is merely performing the activity of transport of goods. Such activity of mere transportation is not subject to levy of service tax. The Tribunal in the said case had also referred to the speech of the Hon'ble Finance Minister made while introducing the finance bill, 2004. The Tribunal set aside the demand.
6. The decision in the case of Ramco Cements Ltd. Vs. Commissioner of Central Excise, Tiruchirappalli, 2023 13 Centax 154 (Tribunal, Madras) was relied by the Ld. counsel to argue that in the said case the Tribunal set aside the demand observing that goods transported by individual transporters owning vehicles without issuance of consignment notes is not subject to levy of service tax under transportation of goods by road service defined under Section 65 (105) (zzp).
7. The Ld. Counsel appeared for the appellant was fair enough to submit that in the appellant's own case for the earlier period from June 2009 to May 2010, the Tribunal had considered the very same issue of refund of service tax. Tribunal had dismissed the appeal vide Final Order No.40007/2019 dated 04.01.2019. It is submitted that in the said case, the Tribunal had relied upon the decision in the case of Commissioner of Customs, C.Ex. & S.T., Guntur Vs. Chebrolu Agros Pvt. Ltd. 2018 (17) GSTL 282 (Tribunal, Hyderabad) which had been affirmed by the Hon'ble Apex Court. It is pointed out that in the said case the Hon'ble Apex Court had affirmed the issue with regard to Business Auxiliary Services and not GTA. The Ld. Counsel argued that the appellant would be able to furnish documents to establish that only hire charges were paid for transport of the goods and that M/s. Shiva 5 Cargo Movers Ltd., being the owner of the vehicle is not a goods transport agency. Only if the service is rendered by a goods transport agency, the levy of Service tax would be attracted. Notification no.36/2004 - service tax dated 31.12.2004 relied by the Tribunal for the earlier period merely states that if the consigner or consignee falls within the clause (vi) would come within the purview. In the present case, as there is no consignment note issued by M/s. Shiva Cargo Movers Ltd., the said notification would not apply.
8. The Ld. AR Shri Satyanarayanan appeared and argued for the department. The findings in the impugned order was reiterated.
9. Heard both sides.
10. The issue that arises for consideration is whether the appellant is eligible for refund of the service tax paid by them on the charges paid for transportation of goods. The taxable service of transportation of goods by road as under Section 65 (105) (zzp) reads as under:
" to any person, by a goods transport agency, in relation to transport of goods by road in a goods carriage".
Goods transport agency is defined under Section 65 (50 b) as under:
" Goods Transport Agency means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called "Rule 4 (B) of Service Tax Rules 1994 read as under:
RULE 4B. Issue of consignment note. --6
Any goods transport agency which provides service in relation to transport of goods by road in a goods carriage shall issue a consignment note to the recipient of Service :
Provided that where any taxable service in relation to transport of goods by road in a goods carriage is wholly exempted under section 93 of the Act, the goods transport agency shall not be required to issue the consignment note. Explanation. - For the purposes of this rule and the second proviso to rule 4A, "consignment note" means a document, issued by a goods transport agency against the receipt of goods for the purpose of transport of goods by road in a goods carriage, which is serially numbered, and contains the names of the consignor and consignee, registration number of the goods carriage in which the goods are transported, details of the goods transported, details of the place of origin and destination, person liable for paying service tax whether consignor, consignee or the goods transport agency.
11. The strong contention put forward by the appellant is that M/s. Shiva Cargo Movers Ltd. who had transported their goods is not liable to pay service tax on transport charges as they are not Goods Transport Agency. For this reason the appellant who is the service recipient is not liable to pay service tax under reverse charge mechanism. The refund claim is filed by the appellant contending that they had paid the service tax under protest even though they are not liable to pay the service tax. The Tribunal in the appellant's own case for the earlier period from June 2009 to May 2010 had considered the very same issue of refund of service tax for transport of their goods by road by M/s. Shiva Cargo Movers Ltd. The refund claim rejected by the department was upheld by the Tribunal.
12. On perusal of the said Final order it is seen that the Tribunal had referred to the decision in the case of Chebrolu Agros Pvt. Ltd. 2018 (17) GSTL 282 (Tribunal, Hyderabad). It was observed that the said decision was maintained by Hon'ble Apex Court. It is now brought to our notice that the appeal that was 7 filed before the Hon'ble Apex Court was in regard to the demand under Business Auxiliary Services and not GTA services. On perusal of the records, it is seen that the appellant has now produced documents to show that M/s. Shiva Cargo Movers Ltd. has not issued any consignment note. The said transporter has issued only invoices periodically to collect transport charges. Similar issue was considered by the Tribunal in the case of Lakshminarayana Mining Company Vs. Commr. Of Central Tax, Bengaluru South GST decided on 07.03.2019. The Tribunal had set aside the demand raised against the appellant therein, though the department alleged that the appellant is recipient of Goods Transport Agency Service. It was held that the transporter of goods was not a GTA and that appellant who is the recipient of service is not liable to pay service tax. The relevant paragraph reads as under:
1. "This appeal challenges the demand of differential tax of Rs.92, 51, 572/- held as liable from M/s.Lakshminarayana Mining Company for the period from 1st January, 2005 to 30th September, 2006 as recipient of 'goods transport agency service', besides interest under Section 75 of the Finance Act, 1994 and imposed penalties under Section 76, Section 77 and Section 78 of the Finance Act, 1994. It is noticed from the records that appellant has paid the entire amount of service tax in dispute which has been appropriated in the impugned Order-in-
Original No.34/2008, dated 21st August, 2008 of Commissioner of Service Tax, Bangalore.
5. The core issue, as concurred with by both sides, is the taxability of the consideration paid by the appellant for utilization of lorries for transportation of 'iron ore' from their mines to the port of export at New Mangalore. It is the claim of the Learned Counsel for the appellant that the trucks are hired by themselves and the 'iron ore' for export are loaded on to them for carrying to the port of export. He contends that there is no agency function involved as the goods are loaded on vehicles hired by them and hence there is no third party involved. He further contends, after taking us through the narrative of the history of taxation of 'goods transport' under Finance Act, 1994, that it was not the intent of the Government to tax 'goods transport operators' but that the tax leviability was to devolve on agencies that perform the function of acceptance of cargo for transport under consignment notes.
9. From the above, it is clear that the tax liability will arise only upon the goods transport agency I,e. one who undertakes responsibility, in full legal sense, for the cargo despatched by it and an individual truck operator who does not accept such responsibility, is merely performing the activity of transport of goods which is not the subject of the tax. It is of course, necessary to point out from the 8 history of the tax on this service, that the blanket intent to tax the operators led to widespread agitation and, conscious of the problems of implementation, the Central Government, upon reintroduction of the levy, restricted it to agencies.
10. It is clear from the records that the invoices that have been relied upon by the adjudicating authority includes addition of service tax component as well as subtraction of the same. It was, therefore, not relevant to the findings in the adjudication order that these were indication of acceptance of tax liability. Furthermore, the reference to goods consignment number in the 'trip sheet' does not constitute the issue of 'goods consignment note' which is essential pre-requisite for taxation of the service.
11. In the light of the above, it would appear that the activity performed for the appellant by transporters falls outside the ambit of Section 65(105)(zzp) of Finance Act, 1994 and is not taxable in their hands.
12. For the above reason, we set aside the impugned order and allow the appeal.
13. The Chennai Bench in the case of Ramco Cements Ltd. Vs. CCE, Tiruchirappalli, (supra) had occasion to analyse the very same issue and held that the recipient of service of transportation by individual transporters owning vehicles would not come within the levy of Section 65 (105) (zz) of the Finance Act 1994. In the said case the Tribunal observed that notification no. 34/2004 - Service Tax dated 03.12.2004 is applicable only for goods transport vehicles used by goods transport agencies. The demand was set aside. After considering the facts and taking note of the decisions in the case of Lakshminarayana Mining Company and Ramco Cements Ltd., we are of the considered view that the appellant has to be given an opportunity to furnish documents and evidence that M/s. Shiva Cargo Movers Ltd. is not a Goods Transport Agency and also that no consignment notes were issued. The matter therefore requires to be remanded to the adjudicating authority who is directed to consider afresh refund claim of the appellant. The adjudicating authority shall decide applicability of the above cited decisions of the Tribunal independent and uninfluenced by the decision of Tribunal in the appellant's own case for the earlier period.
914. In view thereof, the impugned order is set aside. The appeal is allowed by way of remand to the adjudicating authority. All issues left open.
(Order pronounced in the open court on 28.05.2024) (VASA SESHAGIRI RAO) (SULEKHA BEEVI C.S.) Member (Technical) Member (Judicial) Ra