Custom, Excise & Service Tax Tribunal
M/S. Sneh Silk Mills Pvt. Ltd vs C.C.E. Jaipur-Ii on 12 September, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. IV
Appeal No. ST/542, 543, 545, 547-551, 553/2010-ST(DB)
[Arising out of Order-in-Appeal No. 12, 13, 14, 15, 16, 18, 19, 20, 22-KKG-ST-JPR-II-2010 dated 28.01.2010, 05.02.2010, 06.02.2010, 08.02.2010 by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Jaipur-II].
For approval and signature:
Hon'ble Ms. Archana Wadhwa, Member (Judicial)
Hon'ble Shri V.Padmanabhan, Member (Technical)
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
Seen
4
Whether Order is to be circulated to the Departmental authorities?
Yes
M/s. Satyam Syntcotex Pvt. Ltd.
M/s. Gentlemen Suitings Pvt. Ltd.
M/s. Anuvrat Textiles Pvt. Ltd.
M/s. Prestige Suitings Pvt. Ltd.
M/s. Nutech Global Ltd.
M/s. Vijaydeep Silk Mills Pvt. Ltd.
M/s. Basuki Synthetics
M/s. Raghav Sulzcon Pvt. Ltd.
M/s. Sneh Silk Mills Pvt. Ltd. .Applicants
Vs.
C.C.E. Jaipur-II .Respondent
Appearance:
Ms. Rinki Arora, Advocate for the Applicants Shri Sanjay Jain, DR for the Respondent CORAM:
Hon'ble Ms. Archana Wadhwa, Member (Judicial) Hon'ble Shri V.Padmanabhan, Member (Technical) Date of Hearing: 12.09.2016 FINAL ORDER NO. 53582-53590/2016-ST(DB) Per Archana Wadhwa:
As the issue involved in all the appeals is identical they are being disposed of by a common order.
2. As per the facts on record the appellants are engaged in the manufacture of grey fabrics and for the said purpose, they have imported yarn from Nepal. Two types of invoices were raised by the Nepalese exporter, that is, one for the value of the goods and the other showing the other expenses like transportation, clearance expenses, insurance charges, cartage handling and forwarding charges.
3. The revenue by entertaining the view that as transportation from Nepal border to the appellants factory is a service received by the appellant, they are required to discharge their service tax liability on reverse charge basis. Accordingly, proceedings were initiated against them which resulted in passing of the order by the Deputy Commissioner confirming the demand to the extent of Rs.60,750/- along with confirmation of demand and imposition of penalty equivalent to duty in terms of section 78 of the Finance Act 1994. In turn penalties were imposed under section 76 and 77 of the Finance Act. The said order was upheld by Commissioner (A). Hence the present appeal.
4. After hearing both the sides we find that numbers of identical orders were passed in respect of other appellants similarly situate. Their appeals before the Tribunal were disposed of vide Final order number 818-832/2010-SM(BR) dated 24.06.2010. Their appeals were allowed by observing as under:
However, on going through the records, I find that there is no evidence showing that the appellants had instructed the Nepalese suppliers to engage the transporters on their behalf. From the record of the case, it is seen that it is Nepalese suppliers who had engaged the transporters and billed the appellants for value of the goods and also the transport expenses from Nepal border to their factory premises, which were paid by the appellants. I find that the Commissioner (Appeals) in the finding portion of the impugned order has observed that although initially freight/transportation charges had been paid by the consignors (yarn supplier situated in Nepal) on behalf of the consignees (the appellants), but because so paid transportation charges alongwith other charges stand recovered/reimbursed from the appellant to the consignors (suppliers of yarn), the consignors (the Nepalese suppliers) had acted as agents of the consignees and, therefore, on the freight amount paid to the transporters, the service tax is chargeable from the consignees i.e. appellants. But when it is accepted that a it is the Nepalese suppliers who had paid the transportation charges to the transporters, the appellants cannot be treated as person who had engaged the transporter and had paid to them, just because they had reimbursed Nepalese suppliers for the transport expenses from the Nepal border to the appellants factory premises. The consignors in Nepal cannot be treated the appellants agents as no evidence in this regard has been produced. Moreover, for determining as to which person is liable to pay service tax on GTA services in accordance with the provisions of Notification No. 35/2004-S.T. issued under Section 68(2) of the Finance Act, 1994 read with Rule 2(1)(d)(v), the question which has to be answered is as to who had engaged the transporter and who was liable to pay freight to the transporter. In this group of cases, there is no evidence that it is the appellants who had engaged the transporter either directly or through the Nepalese suppliers and therefore they cannot be treated as recipients of GTA services. In these cases, the appellants imported yarn from the Nepalese suppliers and their contract with the Nepalese suppliers is the contract for supply of the goods i.e. yarn and not any particular service; arranging the transport of the goods within the Nepal and from Nepal border to the appellants factory premises by the Nepalese suppliers is an activity incidental to supply of the goods, for which the Nepalese suppliers had engaged transporters. There is no evidence produced to show that Nepalese suppliers had acted as the agents of the appellants for arranging transportation from Nepal border to the factory premises of the appellants. Just because the Nepalese suppliers had billed the appellants separately for transportation from Nepal border to factory premises alongwith other expenses, they do not become the agents of the appellants. In view of this, the appellants cannot be treated as recipients of GTA services in terms of Notification No. 35/04-S.T. and hence liable to pay Service tax.
5. The said decision of the Tribunal stands followed by the present bench in the case of Chairman Silk Mills Pvt. Ltd. Vs. CCE Jaipur vide final order number ST/A/52756/2016-C(DB) dated 26.07.2016. In view of the foregoing, we set aside the impugned orders and allow all the appeals with consequential relief.
[Dictated and pronounced in the open Court]
(V.Padmanabhan) (Archana Wadhwa) Member (Technical) Member (Judicial)
Bhanu
2
ST/542, 543, 545, 547-551, 553/2010-ST(DB)