Custom, Excise & Service Tax Tribunal
Dharmraj Singh vs -Allahabad on 8 February, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Service Tax Appeal No.52576 of 2014
(Arising out of Order-in-Original No.(ST-56/2013)02 of 2014 dated
31/01/2014 passed by Commissioner of Central Excise & Service Tax,
Allahabad)
Shri Dharmraj Singh, .....Appellant
(Village Pakari, P.O. Robertsganj, Sonbhadra)
VERSUS
Commissioner of Customs, Central Excise &
Service Tax, Allahabad ....Respondent
(38, M.G. Marg, Civil Lines, Allahabad)
APPEARANCE:
Shri M.B. Mathur, Advocate for the Appellant
Shri Manish Raj, Authorised Representative for the Respondent
CORAM: HON'BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL)
HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL)
FINAL ORDER NO.70053/2024
DATE OF HEARING : 14 December, 2023
DATE OF PRONOUNCEMENT : 08 February, 2024
SANJIV SRIVASTAVA:
This appeal is directed against Order-in-Original No.(ST-
56/2013)02 of 2014 dated 31/01/2014 passed by Commissioner
of Central Excise & Service Tax, Allahabad. By the impugned
order following has been held:-
ORDER
(i) I confirm the demand of Rs.61,94,880/- (Rupees Sixty One Lakhs Ninety Four Thousand Eight Hundred and Eighty Only) comprising demand of Service Tax Rs.60,14,446/- + Education Cess Rs. 1,20,289/- + Secondary & Higher Education Cess Rs.60,145/- for the period Oct. 2007 to March' 2010, upon M/s Service Tax Appeal No.52576 of 2014 2 Dharamraj Singh, Sonebhadra, and order for recovery of the same under the provisions of proviso to Sub- Section (1) of Section 73 read with Section 73 (2) of Chapter V of the Finance Act, 1994.
(ii) I order for charging Interest at the appropriate rate under the provisions of Section 75 of the Finance Act, 1994 on the amount of Service Tax confirmed at (i) above.
(iii) I impose a penalty of Rs.200/- (Rupees Two Hundred Only) per day for the period during which failure to pay the tax has continued or at the rate of 2% of such tax per month whichever is higher, starting with first day after the due date till 09.05.2008 upon M/s Dharamraj Singh, Sonebhadra, under section 76 of the Finance Act, 1994.
(iv) For their failure to file ST-3 returns up to 10.05.2008, I impose a penalty of Rs.1,000/- (Rupees One Thousand Only) upon M/s Dharamraj Singh, Sonebhadra, under Section 77 of the Finance Act 1994. I impose a further penalty of Rs. 5000/- (Five Thousand Only) under Section 77 (2) of the Finance Act, 1994 on them for their failure to file ST- 3 Returns for the subsequent period.
(v) For their failure to obtain service tax registration under 'GTA Service', I impose a penalty of Rs. 5000/- (Five Thousand Only) or @ of Rupees Two Hundred per day for every day during which such failure continues, whichever is higher starting with the first day after the due date, till the date of actual compliance, under the provisions of Section 77 (1) (a) of the Act, on M/s Dharamraj Singh, Sonebhadra.
(vi) I also impose a penalty of Rs. 61,94,880/- (Rupees Sixty One Lakhs Ninety Four Thousand Eight Hundred and Eighty Only) on M/s Dharamraj Singh, Sonebhadra, under the provisions of Section 78 of the Finance Act, 1994."
Service Tax Appeal No.52576 of 2014 3 2.1 On receipt of specific intelligence against the appellant it was observed that during the period from 2007-2008 to 2009- 2010, appellant entered into specific contract/agreement executed with the Regional Food Controller [District Supply Officer/ District Marketing Officer] provided services by way of Transportation of Food Grains from various godowns to the individual PDS Shop and/or other destination contained in such contract/agreements. Revenue was of the view that services provided by the appellant were classifiable under the category of GTA1.
2.2 Show cause notice dated 12.04.2013 was issued to the appellant asking them to show cause as to why-
1) The service tax amounting to Rs.61,94,880/- (Sixty one lakhs ninety four thousand eight hundred eighty only) should not be demanded and recovered from them alongwith appropriate Interest under the proviso to Section 73 (1) of the Act r/w Section 75 of the Act.
2) Penalty should not be imposed upon them under the erstwhile Section 75A read with Section 77 of the Act for violation of Section 69 of the Act / Rule 4 of the Rules.
3) Penalty should not be imposed upon them under Section 77 of the Act for violation of Section 70 read with rule 7 of the Rules, in case of each default.
4) Penalty should not be imposed upon them under section 76 of the Act for violation Section 68 of the Act read with Rule 6 of the Rules.
5) Penalty should not be imposed upon them under Section 78 of the Act."
2.3 The said show cause notice was adjudicated as per the impugned order referred in para-1 above. Aggrieved appellant has filed this appeal.
1Goods Transport Agency Services.
Service Tax Appeal No.52576 of 2014 4 3.1 We have heard Shri M.B. Mathur learned Counsel for the appellant and Shri Manish Raj learned Authorized Representative appearing for the revenue.
3.2 Arguing for the appellant learned Counsel submits that The issue involve in the present case is whether the appellants were engaged in providing services under the category of Transport of Goods by Road Service without obtaining the registration and payment of due service tax.
The issue involved in this case is no longer res integra by following the various judicial pronouncements. Commissioner (Appeals) Allahabad himself has vide Order- in-Appeal No.ST/APPL/ALLD/2015 dated 16.09.2015 allowed the appeals on similar grounds including the present appeal also.
Vide Order-in-Appeal No.Appeals-I/Meerut/NST/17/2014- 15 dated 12/12/2014 similar order has been passed by the Commissioner (Appeals) Meerut.
In view of the above, there is no merit in the impugned order and needs to be set aside.
4.1 We have considered the impugned orders along with the submissions made in appeal and during the course of argument.
4.2 For holding against the appellant impugned order records as follows:-
29. In this backdrop, I find that the issues to be decided by me in the present case are as under:
(i) whether the services provided by the party are covered under the purview of service tax and appropriately classifiable under Transportation of Goods by Road Service?
(ii) whether the show cause notice has been issued within the period of limitation?
(iii) whether the demand of service tax is maintainable and proposal for imposition of penalties justified?
30. First, I take up the issue of the taxability of services rendered by the party and its classification. For proper Service Tax Appeal No.52576 of 2014 5 appreciation of the case and to arrive at the correct conclusion, it is imperative to visit the relevant terms & conditions of the agreement executed with the RFC. The party have in their defence reply dated 24.05.2013, provided a copy the agreement executed between Shri Ram Transport Company, Varanasi and Regional Food Controller, Division-Varanasi, as a sample. I find that under clause (19) of the contract it has been stated that "That contractor or his authorised agent shall carry out the work connected with the tendered items and transport work of food grains sugar etc. from one place in Division or outside it or any other items at the direction of RFC, RMO, DFMO and SMI/MI at rate fixed or to be fixed by the RF Cor Clause (24) (i) stipulates "The handling & transport contractor can submit bills fortnightly for the work done, duly complete in all respects with the work slips issued by the center incharge..... Clause (24) (ii) states "It will be the duty of the contractor to obtain the work slips on the same day when work is done..." Clause (40) mentions "The contractor shall maintain daily account of all the items of work done by him and shall issue invoice on the prescribed form...".
I have also perused transport challan bearing no. 11606 dated 16.5.2012 which has been produced by the party and issued by the Regional Food Controller, Division- Varanasi for movement of vehicle and find that the said document contains all requisite information in respect of the consignment.
31. I have gone through the allegations contained in the impugned SCN which intends to classify the services rendered by the party under the "Goods Transport Agency Service" and thus it becomes important to revisit the statutory provisions related to the said service. Section 65 (50b) of the Finance Act, 1994 defines "Goods Transport Agency" as follows:- 'goods transport agency' means any person who provides service in relation to Service Tax Appeal No.52576 of 2014 6 transport of goods by road and issues consignment note, by whatever name called,
32. Section 65 (50) of the Act defines the word 'goods' and which has the same meaning assigned to it in clause (7) of Section 2 of the Sale of Goods Act, 1930. The said clause is read as follows:" 'goods' means every kind of movable property other than actionable claims and money, and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be served before sale or under the contract of sale".
33. Section 65 (50a) of the Act defines 'goods carriage' as:
"Goods carriage has the meaning assigned to it in clause (14) of section 2 of the Motor Vehicles Act, 1988." As per Section 2 (14) of the Motor Vehicles Act, 1988, 'goods carriage' means- "Any motor vehicle means any mechanically propelled vehicle adopted for use upon road whether the power of propulsion is transmitted thereto from external or internal source and includes a chassis to which a body has not been attached and a trailer, but does not include a vehicle running upon fixed rails or vehicle of a specified type adapted for use only in a factory or any other enclosed premises or a vehicle having less than four wheels fitted with engine capacity of not exceeding twenty five cubic centimeters."
34. Section 65 (105) (zzp) of the Act defines the 'taxable service' as follows: "any service provided or to be provided, to a customer or any person ['substituted wef. 16.5.2008] by a goods transport agency, in relation to transport of goods by road in a goods carriage".
35. Rule 4B of the Service Tax Rules, 1994 under Rule 4B, inserted with effect from 01.01.2005 by the Service Tax (Fifth Amendment) Rules, 2004, it has been made mandatory for every goods transport agency which provides service in relation to transportation of goods by Service Tax Appeal No.52576 of 2014 7 road to issue a consignment note containing the prescribed particulars.
36. Notification No. 1/2006-ST dated 1.3.2006 grants exemption in the form of abatement of tax equal to 75 per cent of the service tax otherwise payable. In effect, only 25 per cent of the freight paid will be subjected to service tax at the prescribed rate. The exemption will not be available if the goods transport agency has (i) taken Cenvat Credit of duty on inputs or capital goods used for providing taxable service; or (ii) taken Cenvat credit of service tax on input services used for providing taxable service; or (iii) availed exemption on cost of goods and materials sold to the recipient of the service, in terms of Notification No. 12/2003-St dated 20.6.2003.
37. Notification No. 12/2008-ST dated 1.3.2008 provides unconditional exemption from service tax on 75 per cent of the gross amount charged by the goods transport agency for providing the service.
38. Notification No. 33/2004-ST dated 3.12.2004 grants full exemption from tax to transport fruits, vegetables, eggs or milk by road in a goods carriage. Vide Notification No. 04/2010-ST dated 07.02.2010 the aforesaid notification have been amended by substituting, in the opening paragraph, for the words "eggs or milk", the words "eggs, milk, food grains or pulses".
39. Notification No. 34/2004-ST dated 3.12.2004 grants full exemption from tax in the following two situations:
(a) where the gross amount charged on all consignments transported in a goods carriage does not exceed Rs. 1500;
(b) where the gross amount charged on an individual consignment' transported in a goods carriage does not exceed Rs. 750.
Service Tax Appeal No.52576 of 2014 8
40. Rule 2 (1) (d) (v) of the Service Tax Rules, 1994 made certain specified person liable to pay service tax. The provisions of the said rules are reproduced below:
where the consignor or consignee of goods is:
(a) any factory registered or governed by the Factories Act;
(b) any company formed or registered under the Companies Act;
(c) any statutory corporation;
(d) any registered society,
(e) any co-operative society.
(f) any dealer of excisable goods registered under the Central Excise Act/Rules;
(g) any body corporate established by any law;
(h) partnership firm.
the person liable for paying service tax will be 'any person' who pays or is liable to pay freight either himself or through his agent for the transportation of such goods by road in a goods carriage'.
• Where, the consignor or consignee of goods do not fall in the above categories the goods transport agency shall be liable to pay service tax.
41. It can be seen from the above discussions and the provisions of law, that the services provided by the party to RFC are clearly liable to be classified as 'Transport of Goods by Road Service. The agreement clearly specifies the nature of work assigned to the party, that is, transportation of food grains from various godowns to the individual PDS Shops or other destination by their own truck. Thus, in my view, clearly, the party is providing GTA service.
The party has submitted that in absence of fulfillment of certain ingredients contained in clause (50 b) of Section 65 of the Act, in juxtaposition with clause (14) & (20) of Section 2 of the Motor Vehicle Act, 1988 which are required to be fulfilled, the services provided by them are Service Tax Appeal No.52576 of 2014 9 not covered under GTA service. In context of this argument of the party, I hold, that they are confusing the issue by trying to import the provisions of Motor Vehicle Act into the present case. The provisions of service tax law are complete in themselves and have been quoted at length in the preceding paragraphs. Read in light of the extant service tax law, the services provided by the party are clearly classifiable under GTA service.
The party have also submitted that in terms of agreement with RFC, they only provided the trucks and Section 3(30) of the Motor Vehicle Act made RFC the owner of these trucks. In context of this argument of the party, I find that it is yet another of their attempts to obfuscate the issue by importing certain provisions of Motor Vehicle Act into the issue. In view of the facts of the case, I find that the ownership of the vehicles remains with the party and clearly the services provided by them are classifiable under GTA service.
The party have also submitted that they are not issuing consignment note and therefore the said services cannot be made taxable under the category of GTA service. I find that on this point too, the party have presented the facts improperly. Clause (24) (ii) of the Agreement stipulates that- "It will be the duty of the contractor to obtain the work slips on the same day when work is done...". Similarly, Clause (40) states that "The contractor shall maintain daily account of all the items of work done by him and shall issue invoice on the prescribed form........ I have also perused transport challan bearing no. 11606 dated 16.5.2012 issued by RFC for movement of vehicles and I find that the said document contains all requisite information in respect of any consignment. Under the provisions of Section 65 (50b), the "Goods Transport Agency includes any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.....
Service Tax Appeal No.52576 of 2014 10 (emphasis applied), and thus I hold that the transport challan and invoice issued in the present case qualify to be a consignment note, specified under Rule 4B of the Service Tax Rules, 1994, Further, the reverse charge mechanism provided under Rule 2 (1) (d) (v) of the Service Tax Rules, 1994 is not applicable since the service recipient (s) are not falling under any of the category of specified person.
42. Further, in a case of similar nature, the levibility of service tax on transportation of food grains for the period prior to 27.2.2010, has been upheld by Hon'ble Punjab & Haryana High Court in the judgement in the case of Harman Transport Co. vs. Food Corporation of India & Others in CWP No. 15974 of 2011 dated 16.04.2012. The High Court held as under:
(9) It has also not disputed that 'service tax' was leviable on transport service concerning 'food grains and pulses till 27.2.2010 when those items were also included in the list of exempted items. It is pertinent to mention that on 3.12.2004 a notification in exercise of power conferred by sub-section (1) of Section 93 of the Act was issued by the Government of India exempting payment of tax concerning taxable service provided by a goods transport agency to a customer in relation to transport of fruit, vegetables, eggs or milk by road in a goods carriage from the whole of service tax leviable thereon under Section 66 of the Act. It did not include 'foods grains and pulses. The notification dated 27.2.2010 amended the notification of 03.12.2004 and added 'food grains and pulses in the list of exempted items. Therefore, it must be concluded that goods transport service provided by a goods transport agency to a customer in relation to transport of 'food grains and pulses' by road in a goods carriage Service Tax Appeal No.52576 of 2014 11 were exempted from payment of 'service tax' with effect from 27.2.2010......
(Emphasis Supplied)
43. It is amply clear from the facts of the case and above cited judgment of the hon'ble High Court, that the services provided by the party by way of transportation of food grains by road is chargeable to service tax during the material time and appropriately classifiable under "Goods Transport Agency Service". Therefore, I hold that the party is liable to pay service tax amounting to Rs.61,94,880/- (including cess) on gross taxable value Rs. 12,55,93,774/- received by them during the period 2007-08 to 2009-10. I further find that the demand of service tax amounting to Rs 61,94,880/- (including cess) has been calculated correctly by extending the benefit of 75% abatement, provided under Notification No. 1/2006-ST for the period from 2008-09 and 2009-10. I also find that during the period 2007-08, the party is not eligible to get the benefit of abatement, due to non-fulfillment of the specified conditions."
4.3 Undisputedly, in the present case appellant was not issuing any consignment note which is an essential requirement for classification of their services under the category of GTA. This fact about not issuance of consignment note is not disputed by the revenue that being so the services provided by the appellant cannot be classifiable under the category of GTA services for making the demand of service tax. Adjudicating authority in the impugned referred to ceratin documents which though were not consignment note etc., to hold that these documents are consignment notes. Commissioner (Appeals) order dated 12.12.2014 referred by the Counsel has dropped the demand by observing as follows:-
The moot point to decide is whether appellant is liable to pay Service Tax in respect of transportation provided by him. I find that appellant has contested that he is merely a transporter and does not fall in the category Service Tax Appeal No.52576 of 2014 12 of Goods Transport Agency (GTA) and that transportation per se is not taxable unless same has been provided by a Goods Transport Agency. In a latest judgment of CESTAT, New Delhi in the case of Nadarganj Sihori Sugar Co. Vs Commissioner of Central Excise, Lucknow[ 2014(46) GST/47 taxman.com 92], it was held that mere transportation of goods in a motor vehicle does not amount to Goods Transport Agency (GTA) services-GTA must provide service of transportation of goods under a consignment note, which should have particulars as prescribed in explanation to rule 4B- Consignment note issued by GTA represents its liability to: (a) transport consignment handed over to it to destination, (b) undertake delivery of same to consignee, and (c) temporarily store it till delivery-Merely a bill issued for transportation of goods cannot be treated as consignment note-Therefore, transportation of goods by individual truck owners under fortnightly bills without issue of consignment note, GR's & billties etc. as prescribed in rule 4B would be simple transportation and not service of GTA.
This appeal is squarely covered by the above mentioned decision and hence the appellant has no liability at all to pay the Service Tax.
Moreover, the adjudicating authority in Para 5.1.4 of the impugned order has discussed Rule 2(1)(d) of the Service tax Rules, 1994 and was of the opined that "in terms of said rule, if the consignee or consigner is any corporate establish by or under any law, is liable to pay tax. But it is a matter of fact and the party has the onus to establish the said factual position by producing evidences/ document, in order to get the benefit of said legal provision. But the party has not produced any such evidence. As such, I find that the party is liable to pay tax and not FCI due to non-submission of documents/evidence." Thus, the adjudicating authority was convinced that if the appellant had given documentary Service Tax Appeal No.52576 of 2014 13 evidence showing FCI to be any corporate body established by or under any law, then the liability to pay Service Tax would have been on FCI and not the appellant. The only thing that adjudicating authority was not sure was whether Food Corporation of India is a corporation or not, as the appellant had not given any evidence/document for the same. The word Corporation is itself inbuilt in Food Corporation of India and also content downloaded from Wikipedia (which is easily accessible on internet) clearly shows Food Corporation of India as a Government owned corporation, leaving no doubt that FCI falls under the category of Rule 2(1) (d) of the Service Tax rules, 1994 and for this no documentary evidence was required. Hon'ble Tribunal, Delhi in the case of Amrita Mouldings Pvt. Ltd. Vs Commissioner of Central Excise, Ghaziabad (reported in 2013(30) S.T.R. 420) held that:
´In respect of GTA service when the consignor or consignee fall in the categories mentioned in Rule 2(1)
(d)(v) of the Service Tax Rules, 1994 and Notification No. 35/2004-S.T., the person liable to pay service tax is the one who is liable to pay freight either himself or through his agent----".
Similar view was taken by Hon'ble Tribunal, Bangalore in the case of SICGIL India Ltd. Vs Commissioner of Central Excise, Cus. & S.T.,Visakhapatnam (reported in 2010(19) S.T.R. 747), wherein it was held that " It is very clear in terms of Rule 2(1) (d) (v) that the liability to pay Service Tax is cost(sic) (cast) on the person who pays the freight.". Also Hon'ble Tribunal, Bangalore in the case of MSPL Ltd. Vs Commissioner of Central Excise, Belgaum (reported in 2009(13) S.T.R. 554) had the same opinion. 4.4 In case of The Ramco Cements Limited [Final Order No. 40853 / 2023 dated 27.09.2023] Chennai Bench has held as follows:-
Service Tax Appeal No.52576 of 2014 14 11.1 In the case of M/s. K.M.B. Granites Pvt. Ltd. v.
Commissioner of C.Ex., Salem [2010 (19) S.T.R. 437 (Tri.
- Chennai)] this Bench had an occasion to consider an almost similar issue of liability to Service Tax on services of GTA vis-à-vis Rule 2(1)(d)(v) ibid. After hearing both sides, this Bench has held as under: -
"3. Heard both sides. It has been consistently contested by the assessees that services were not being provided to them by the Goods Transport Agency but by individual truck owners/lorry owners. Before the lower appellate authority they have also provided written submissions in support of their above submission. It has been held by the Tribunal in the case of Lakshminarayana Mining Co. v. CST, Bangalore - 2009 (16) S.T.R. 691 (Tri.-Bang.) and in the case of CCE, Guntur v. Kanaka Durga Agro Oil Products Pvt. Ltd. - 2009 (15) S.T.R. 399 (Tri.-Bang.) that transport undertaken by individuals owning and operating lorry and trucks is not subject to service tax as in these cases services has not been provided by Goods Transport Agency Service. Following the ratio of the above decisions, I hold that the appellants are not liable to Service tax and imposition of penalty. I, therefore, set aside the impugned orders and allow these appeals."
11.2 It appears that the Revenue filed an appeal before the Hon‟ble jurisdictional High Court of Madras against the above order and the Hon‟ble High Court vide its Order reported in 2013 (32) S.T.R. J205 (Mad.) has dismissed the appeal, thereby upholding the order of this Bench. 11.3 Further, we find that the other orders relied upon by the Ld. Consultant clearly confirm 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 Service Tax Appeal No.52576 of 2014 15 to the levy of Service Tax under the category of „transportation of goods by road‟ service.
12. The above 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 Hon‟ble jurisdictional High Court has upheld the order of this Bench. Following therefore the same view, we hold that the demand of Service Tax confirmed in the impugned order cannot sustain. 4.5 In view of the above, we find no merits in the impugned order and set aside the same.
5.1 Appeal is allowed.
(Pronounced in open court on- 08 February, 2024) Sd/-
(P.K. CHOUDHARY) MEMBER (JUDICIAL) Sd/-
(SANJIV SRIVASTAVA) MEMBER (TECHNICAL) akp