Custom, Excise & Service Tax Tribunal
India Sugars And Refineries Ltd vs Cce Bellary on 2 August, 2024
ST/403/2010
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL
BANGALORE
REGIONAL BENCH - COURT NO. 1
Service Tax Appeal No.403 of 2010
(Arising out of Order-in-Appeal No.493/2009 dated 01.12.2009
passed by the Commissioner of Central Excise(Appeals), Mangalore)
M/s. India Sugars and
Refineries Ltd.,
Chitwadgi, Appellant(s)
Hospet - 583 211.
Karnataka.
VERSUS
Commissioner of Customs,
Central Excise & Service Tax, Respondent(s)
No.351, GSM Road, Bellary, Karnataka.
APPEARANCE:
Ms. Sneha, Advocate, Advocate for the Appellant Mr. M.A. Jithendra, Assistant Commissioner(AR) for the Respondent CORAM: HON'BLE DR. D.M. MISRA, MEMBER (JUDICIAL) HON'BLE MRS. R. BHAGYA DEVI, MEMBER (TECHNICAL) Final Order No. 20609 /2024 DATE OF HEARING: 09.02.2024 DATE OF DECISION: 02.08.2024 PER : D.M. MISRA This is an appeal filed against Order-in-Appeal No.493/2009 dated 01.12.2009 passed by the Commissioner of Central Excise(Appeals), Mangalore.
2. Briefly stated the facts of the case are that the appellant are registered as a 'manufacturer' of sugar and also registered under Service Tax for the purpose of Goods Transport Agency Page 1 of 5 ST/403/2010 services. On verification of their records, it was alleged that the appellant was paying freight charges to transporter towards transportation of sugarcane from the fields of cane growers to their factory on behalf of the cane growers and recovering the said freight amount from the total amount paid to the cane growers from whom the cane had been sourced. On completion of investigation, a show-cause notice was issued to them demanding service tax of Rs.1,12,396/- under the GTA service after allowing abatement of 75% for the period from 01.01.2005 to 05.05.2006 with interest and penalty. On adjudication, the demand was confirmed with interest and penalty. Aggrieved, they filed appeal before the learned Commissioner(Appeals), who in turn rejected their appeal. Hence, the present appeal. 3.1. At the outset, the learned advocate for the appellant has submitted that appellant procured sugarcane from farmers on the basis of ex-factory price. The cost of transportation of sugarcane from fields to factory gate paid by the farmers who sell sugarcane to them. Standard rate of transportation charges (per tonne basis) is agreed between the representatives of farmers and representatives of truck owners or operators. It is agreed between farmers and truck operators that the transport charges would be deducted by the appellant from the purchase price and same would be paid to the truck operators. She has further submitted that the Department alleged that the appellant being a consignee and also falling under the meaning 'person' Page 2 of 5 ST/403/2010 specified in Rule 2(1)(d)(v) of Service Tax Rules, 1994, is liable to pay service tax. She has submitted that the issue is no more res integra and covered by the judgment of this Tribunal in the following cases:
i. Shri Prabhulingeshwar Sugars & Chemicals Ltd. Vs. CC,CE&ST, Belgaum [2022(64) GSTL 350 (Tri. Bang.)] ii. Shreenath Mhaskoba Sakhar Karkhana Ltd. Vs. CCE, Pune-III [2017]77 taxmann.com 216 (Mumbai-CESTAT) iii. Lakshminaryana Mining Company Vs. CCT, Bengaluru South GST [2019(27) GSTL 745 (Tri. Bang.)] 3.2. Further the learned advocate has submitted that the show-
cause notice was issued on 31.10.2008 for recovery of the amount pertaining to the period 01.01.2005 to 05.05.2006 is barred by limitation as no facts have been suppressed or concealed from the knowledge of the Department. Also, penalty imposed on the appellant is unwarranted.
4. Learned AR for the Revenue reiterated the findings of the learned Commissioner(Appeals).
5. Heard both sides and perused the records.
6. The short issue involved in the present appeal is whether the appellant is required to pay service tax on the amount of transportation cost paid to the transporters and later recovered from the cane growers. We find that the issue is no more res integra and covered by the judgment of this Tribunal in the case of Shreenath Mhaskoba Sakhar Karkhana Ltd.(supra). In Page 3 of 5 ST/403/2010 the said case also, transportation cost has been borne by the farmers which was initially paid by the manufacturer of sugar and later deducted from the price of the sugarcane from the farmers. Analysing the facts and principles of law, this Tribunal observed as follows:-
5. On careful consideration of the submissions made by both sides, we find that the impugned order upheld and confirmed the demand of Service Tax liability with interest and penalty. In our considered view the impugned order is unsustainable and liable to be set aside for more than one reason.
5.1 Firstly, we find that the claim of the appellant before the lower authorities as well as before us is that transportation charges are paid by the individual farmer is correct. We have scrutinised the bill No. 93537 which was produced by the learned Counsel.
On perusal of the said bill which had been settled by the appellant, to the farmer, clearly indicated that the appellant had deducted an amount paid by them towards harvesting cost to labours and transportation cost of sugarcane to their factory. After reducing the amount paid, appellant settled balance bill to the farmer. We also find that the learned departmental representative putting on record a letter received also includes a bill settled by the appellant wherein it is indicated that appellant had deducted the transportation cost and paid the same to the transporter. On this factual matrix in this case, we have to hold that appellant need not pay Service Tax on the amount of transportation charges. If the appellant had borne and paid transportation charges that would have been liable to pay Service Tax liability under "Reverse Charges Mechanism" as per the provision of Finance Act, 1994 and Rules made thereunder. Again there are no provisions for appellant to pay tax on deducted amount, from the final settlement of sale of sugarcane, as it cannot be treated as transportation charges paid by the appellant.
5.2 Secondly, we find that the learned Counsel was correct in placing on record that similar issue came in before the Bench, for taxability of amount paid to truck owner as per various decision cited at paragraph Page 4 of 5 ST/403/2010 No. 3, are squarely applicable in this case and are in favour of the appellant herein.
6. In view of the foregoing, in the facts and circumstances of this case we hold that the impugned order is unsustainable and liable to be set aside and we do so.
7. in the present case also, the transportation cost has been borne by the farmers and therefore, the appellant cannot be saddled with the liability to discharge service tax. Hence, we do not find any reason to deviate from the above said decision of the Tribunal. Consequently, the impugned order is set aside and appeal is allowed with consequential relief, if any, as per law.
(Order pronounced on 02.08.2024) (D.M. MISRA) MEMBER (JUDICIAL) (R. BHAGYA DEVI) MEMBER (TECHNICAL) Raja...
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