Custom, Excise & Service Tax Tribunal
M/S.Sikkim Nationalized Transport vs Commissioner Of Central Excise & ... on 31 August, 2017
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH: KOLKATA
1-2) Appeal Nos. ST/545/12 & 70947/13
Cross Objection No.CO-75113/14
Sl.No.1) Arising out of Order-in-Appeal No.58/Slg/2011 dated 25.10.2011 passed by the Commissioner(Appeal-IV), Central Excise, Kolkata.
Sl.No.2) Arising out of Order-in-Original No.31/COM/ST/SLG/12-13 dated 27.02.2013 passed by the Commissioner of Central Excise & Service Tax, Siliguri.)
M/s.Sikkim Nationalized Transport
Applicant (s)/Appellant (s)
Vs.
Commissioner of Central Excise & Service Tax, Siliguri Respondent (s)
Appearance:
Shri B.N.Chattopadhyay, Consultant and Shri Prakik Choudhary, C.A. for the Appellant Shri S.Mukhopadhyay, Supdt.(AR) for the Revenue CORAM:
HONBLE SHRI JUSTICE (DR.) SATISH CHANDRA, PRESIDENT HONBLE SHRI V.PADMANABHAN, MEMBER(TECHNICAL) Date of Hearing :- 31.08.2017 Date of Decision :- 01.09.2017 ORDER NO.FO/77120-77121/2017 Per Shri V.Padmanabhan.
These appeals are filed against Order-in-Original NO.31/COM/ST/SLG/12-13 dated 27.02.2013 in which the Service Tax amounting to Rs.1,24,66,261/- for the period 2007-08 to 2011-12 was confirmed. Further the adjudicating authority has demanded interest as well as penalties falling under various sections of the Finance Act, 1994. The second appeal is against Order-in-Appeal No.58/Slg/2011 dated 25.10.2011 passed by the Commissioner(Appeal-IV), Central Excise, Kolkata in which penalty was imposed on the appellants for failure to take registration and pay Service Tax.
2. Briefly stated the facts of the case are that the appellant is a department under the Govt. of Sikkim. They provided vehicles as per the transport intent and order for vehicles issued by Army and General Reserved Engineering Force (GREF). The appellants did not issue any consignment note in relation to transport of goods by road, but the vehicles were sent at the disposal of Army/GREF. After utilizing the vehicles, the army issues load tally document detailing the goods sent by them and made payment to the appellant department for use of the trucks. The department entertained the view that the appellant was liable to pay Service Tax on the amounts received by them from Army/GREF for use of the vehicles under the category of Goods Transport Agency. The department further noticed that the appellant had provided buses on monthly payment for conveyance of military personnel, Service Tax under the category of Rent a Cab was held as payable for such consideration. After conclusion of investigation and issue of Show Cause Notice, the demand for Service Tax was confirmed by the impugned order dated 27.02.2013. Aggrieved by the above Order-in-Original two appeals have been filed.
3. With the above background, we heard Shri B.N.Chattopadhyay, ld.Consultant for the appellant and Shri S.Mukhopadhyay, ld.AR for the department.
4. The counsels for the appellant argued that the appellant has provided vehicles for use of Army/GREF. No consignment note was issued as contemplated under the definition of GTA Service. He further argued that the activity carried out by them does not fall within the category of Goods Transport Agency, since they are department of the Government of Sikkim and they have only provided vehicles and collected payment for the same. He further argued that in case the Service Tax demand against them were to be upheld, they will be entitled to the benefit of 75% abatement on the taxable value in terms of Notification No.35/2004 and for the benefit of Notification 1/2006-ST in respect of Rent a Cab Services.
5. The ld.AR reiterated the findings of the Commissioner in the impugned order.
6. The adjudicating authority has held that the activity of making available vehicles to Army and GREF will fall within the Goods Transport Agency Service.
7. After perusal of record we find that the appellant is a State Government department of the Government of Sikkim (Home Department). The circumstances in which the appellant was required to make vehicles available to Army and GREF has been explained by the appellant as follows:-
Sikkim is a bordering State with China. Moreover, the geographical location of the State is so crucial and critical that any sort of disturbance in the hill area will render the State cut off from the rest of the country. There are landslides especially during the rainy season on the track to the plan, the entire state would be separated from the whole of the country. It was also absolutely necessary for the Army and General Reserve Engineering Force (GREF) in the State where any dislocation in the road track would suspend the supply of food and other necessities to the Army and GREF. The government was also bound to reach the necessities including food items to the common people of Sikkim at the time of any dislocation of traffic and strike/bandh where private buses and trucks are taken away from the road. In view of the crucial situation of the State and posting of Army and GREF in the state and to prevent any dislocation in the transportation of the goods and Army personnel and also passengers in their needs. The Sikkim Govt. in consultation with the Central Govt. opened the governmental transport arrangement and buses for carrying of passengers especially during the time of disturbance/dislocation of the road tracks etc. The Circular No.89/7/2006-ST dated 18.12.06 issued by the Board which clarifies that if the Govt. department (sovereign/public authorities) perform any mandatory or statutory function under the provisions of any law and collected any fees, such activities should be treated as activity purely in public interest and will not be taxable.
8. The appellants have claimed that the activity performed by them will fall within the above Circular issued by the CBEC and hence they were not required to pay any Service Tax.
We have perused the above Circular. The CBEC has clarified vide above Circular that activities performed by Government and its wings which are in public interest and is undertaken as mandatory and statutory function are not to be charged to Service Tax even if some amount is charged by way of for the provision of such activity.
9. After considering the circumstances in which the appellant has made available vehicles for army and GREF in the state, we are of the view that such activity was in pursuance of public interest. Keeping in view the fact that Sikkim is a state bordering China we appreciate that the Government was bound to reach the necessities including food to people of Sikkim at the time of dislocation of traffic and when private crushers and trucks are taken away from the road. We have no doubt that the activity performed is part of the statutory function of the State and hence in the light of the CBECs Circular (supra), cannot be considered as provision of taxable service.
10. In view of the above discussions, we set aside impugned orders and appeals are allowed.
(Pronounced in the open court on 01.09.2017.)
SD/ SD/
(JUSTICE DR. SATISH CHANDRA) (V.PADMANABHAN)
PRESIDENT MEMBER(TECHNICAL)
sm
5
Appeal Nos.ST/545/12 & 70947/13