Karnataka High Court
Commissioner Of Service Tax vs M/S Lakshminarayana Mining Co on 1 August, 2018
Bench: Vineet Kothari, S.Sujatha
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IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 1ST DAY OF AUGUST 2018
PRESENT
THE HON'BLE Dr.JUSTICE VINEET KOTHARI
AND
THE HON'BLE Mrs.JUSTICE S.SUJATHA
C.E.A. No.44/2010
BETWEEN:
COMMISSIONER OF SERVICE TAX
SERVICE TAX COMMISSIONERATE,
NO.16, S.P. COMPLEX, LALBAGH ROAD,
BANGALORE-560 027. ...APPELLANT
(BY MR. AKASH B. SHETTY, ADV. FOR
MR. N.R.BHASKAR, SR.CGSC)
AND:
M/S. LAKSHMINARAYANA MINING COMPANY,
OLD NO.33, NEW NO.100,
SANNIDHI ROAD, BASAVANAGUDI,
BENGALURU - 560 004. ...RESPONDENT
(BY MR.K.S. RAVISHANKAR, ADV.)
THIS C.E.A. IS FILED UNDER SECTION 35G OF THE
CENTRAL EXCISE ACT, PRAYING TO DECIDE THE SUBSTANTIAL
QUESTION OF LAW STATED THEREIN, AND SET ASIDE THE
CESTAT, SOUTH ZONE BENCH, BENGALURU IN FINAL ORDER
NO.1149/2009 DATED 25.09.2009 IN APPEAL NO.ST/620/2008
AND RESTORE THE ORDER IN ORIGINAL NO.34/2008 DATED
Date of Order 1.8.2018 CEA No.44/2010
Commissioner Of Service Tax Vs.
M/S. Lakshminarayana Mining Company
2/12
21.08.2008, IN THE INTEREST OF JUSTICE AND EQUITY AND
ETC.
THIS C.E.A. COMING ON FOR ORDERS THIS DAY, Dr.
VINEET KOTHARI J. MADE THE FOLLOWING:-
ORDER
Mr.Akash B. Shetty, Adv. for Mr.N.R.Bhaskar, Sr.CGSC, for Appellant Mr.K.S.Ravishankar, Adv. for Respondent The Revenue has filed this Appeal in this court under Section 35G of the Central Excise Act, 1944, raising certain substantial question of law arising from the order of the learned CESTAT dated 25.09.2009 in Appeal No.ST/620/2008 of M/s.Lakshminarayana Mining Company Vs. CCE, Bengaluru.
2. The respondent assessee M/s.Lakshmi- narayana Mining Company, Bengaluru, during the relevant period, was engaged in the business of export of Iron Ore and was registered with the Department Date of Order 1.8.2018 CEA No.44/2010 Commissioner Of Service Tax Vs. M/S. Lakshminarayana Mining Company 3/12 under the category of 'Goods Transport Agency Services' (GTA for short) also.
3. The period in question for payment of Service Tax for the period from 1.1.2005 to 30.09.2006 and the case against the respondent - assessee is that it had short paid the service tax by Rs.92,51,572/- on the services rendered and they have paid service tax to the tune of Rs.63,61,833/- against the total liability of Rs.1,56,13,405/-.
4. The Learned Tribunal held in favour of assessee that the appellant/assessee was not liable to pay service tax under the category of GTA during the aforesaid period giving the following reasons:
"4. We have heard both sides. We find that the appellants paid service tax under the head "GTA"
as recipient of GTA services in terms of Rule 2(1) (d) (v) of Service Tax Rules, 1994 during the material period. LMC received service of transportation of goods i.e., iron ore by the transporters. The commissioner rejected the plea of the appellants that they had Date of Order 1.8.2018 CEA No.44/2010 Commissioner Of Service Tax Vs. M/S. Lakshminarayana Mining Company 4/12 received service of transportation of goods either from owners of trucks or goods transport operators relying on the following statutory provisions:
"Section 65(50b) "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 Section 65 (105) (zzp) to a customer, by a goods transport agency, in relation to transport of goods by road in a goods carriage"
4.1. He held that by virtue of the above provisions, the service received by LMC was exigible under the category of "GTA". He found that the providers of service involved were commercial concerns engaged in the business of transportation of goods in a goods carriage by road. These facts were not in dispute. A couple of bills seen by him indicated that the tax liability was abated from the mutually agreed amount for transport of consignments. He held that goods transport agency themselves could be the owner of the trucks/operators.
5. The appellants had mis-declared the actual taxable valur in the ST-3 returns. This warranted invocation of proviso to Section 73(1) of the Act. The plea that penalty was not justified since the appellants had discharged tax liability before issue of show cause notice was rejected relying on the following judgments of the High Court:
Date of Order 1.8.2018 CEA No.44/2010 Commissioner Of Service Tax Vs. M/S. Lakshminarayana Mining Company 5/12
a) CCE & C Aurangabad Vs Padmashri V.V. Patil S.S.K. Ltd - 2007 (215) ELT 23 (BOM-H.C.)
b) M/s. Sai Machine Tools Pvt. Ltd. - 2006 (203) ELT 15 (M.P.-H.C.)
5.1. From the impugned order it is not obvious that the appellants had short paid service tax by not paying tax due in certain cases during the material period or paid less tax in respect of all consignments for which it had incurred freight. In any case, we find that the Commissioner has not effectively countered the plea of the appellants that they had not received services from a GTA. The Commissioner has attempted to classify services received from goods transport owners/goods transport operators as GTA service defined under Section 65 (50b) of the Act. We find that the claim of the appellants that the impugned services were not exigible to service tax is amply supported by the following extract of the Budget Speech of the Finance Minister, made while introducing the Finance Bill, 2004.
"149. 58 services have been brought under the net so far. I propose to add some more this year. These are business exhibition services; airport services; services provided by transport booking agents; transport of goods by air; survey and exploration services; opinion poll services; intellectual Date of Order 1.8.2018 CEA No.44/2010 Commissioner Of Service Tax Vs. M/S. Lakshminarayana Mining Company 6/12 property services other than copyright; brokers of forward contracts; pandal and shamiana contractors; outdoor caterers; independent TV/radio programme producers; construction services in respect of commercial or industrial constructions; and life insurance services to the extent of risk premium. I may clarify that there is no intention to levy service tax on truck owners or truck operators......"
5.2. From the above pronouncement by the Finance Minister, the legislative intent not to tax truck owners or truck operators is beyond doubt. In the absence of a finding that the appellants had received the service of transport of goods from any GTA, the impugned demand of service tax and penalties are liable to be set aside. We also find that this Bench had observed in Final Order Nos. 527 & 528/2009 dated 12.03.2009 that "from the definition of the GTA and also the clarification given by the Finance Minister in the Budget Speech, we are of the view that the tax has been paid wrongly and the respondents are not liable to pay any service tax." This was in a case where differential service tax had been demanded in respect of services received from individual truck owners.
6. In the circumstances, we set aside the impugned order and hold the appellants not liable to Date of Order 1.8.2018 CEA No.44/2010 Commissioner Of Service Tax Vs. M/S. Lakshminarayana Mining Company 7/12 service tax under the category of GTA during the material period and allow this appeal."
5. The present appeal, filed by Revenue, in fact came to be disposed of by a co-ordinate bench of this court on 20.4.2011. The relevant portion of which is quoted below for reference:
"5. Therefore the question that arises for consideration in this appeal is as to whether the assesses are liable to pay service tax or not under the category of Goods Transport Agency?
6. An identical issue came up for consideration before the Division Bench of this Court in CEA No.121/2009 and connected matters. This court by the order dated 23.3.2011 came to the conclusion that service tax is paid on transportation charges fell within the phrase "clearance of final products from the place of removal" and therefore, the assessee was entitled to CENVAT credit."
The question of law that arises for consideration in this appeal having since been answered by the Division Bench in the above referred appeal, the substantial question of law are answered in favour of the assessee and against the revenue."
Date of Order 1.8.2018 CEA No.44/2010 Commissioner Of Service Tax Vs. M/S. Lakshminarayana Mining Company 8/12
6. Thus, further appeal was filed by the Revenue before the Hon'ble Supreme Court in Civil Appeal No.11398/2016, arising out of present CEA No.44/2010, the Commissioner of Service Tax, Bengaluru Vs. M/s.Lakshminarayana Mining Company, and the matter came to be remanded back to this court by the Hon'ble Supreme Court with the following observations, vide order dated 24.01.2018:
"From the aforesaid it is clear that the question which needed consideration by the High Court was as to whether the category of "Goods Transport Agency" is exigible to service tax as per Section 65(105) (zzp) and Section 65 (50b) of the Finance Act as well as Rule 2(1)(d)(v) of the Service Tax Rules, 1994. Section 65(50b) defines "Goods Transport Agency" to mean any person who provides service in relation to transport of goods by road and issues consignment note by whatever name called. On the other hand, Section 65(105) (zzp), provides that the service to a customer by a goods transport agency, in relation to transport of goods by road in a goods carriage.
Date of Order 1.8.2018 CEA No.44/2010 Commissioner Of Service Tax Vs. M/S. Lakshminarayana Mining Company 9/12 It is on the basis of the aforesaid definitions the High Court was required to decide as to whether the services provided by the respondent(s)/assessee(s) herein are covered by the aforesaid definitions. The High Court has not discussed the aforesaid issue. Instead, it has dismissed the appeal of the Revenue by observing that the aforesaid questions of law are covered by the decision of the Division Bench of the High Court dated 23.03.2011 in C.E.A. No.121/2009 and other connected matters titled as Commissioner of Central Excise & S.T., LTU, Bangalore versus ABB Ltd., reported in [2011(23) S.T.R. 97 (Kar.)].
In the said judgment the issue pertained to CENVAT credit of service tax in respect of input service and that whether output transportation from the place of removal was input service of which CENVAT credit was admissible. Thus, the issue in ABB Ltd., case was entirely different and the High Court has wrongly dismissed the appeal of the Revenue/appellant herein by relying upon the said judgment.
In view of the aforesaid, the appeal is allowed and the impugned judgment of the High Date of Order 1.8.2018 CEA No.44/2010 Commissioner Of Service Tax Vs. M/S. Lakshminarayana Mining Company 10/12 Court is set aside and the matter is remitted to the High Court for de novo consideration."
7. This is how, the matter is again heard by us today.
8. Learned counsel for assessee has urged various submissions before this court on merits as well as explaining the history of the imposition of service tax with relation to Goods Transport Agencies and Truck operators and interalia has also referred, to the Judgment of the Hon'ble Supreme Court in the case of Laghu Udyog Bharati Vs. Union of India reported in (1999) 112 E.L.T. 365 (S.C.).
9. Having heard the learned counsels for the parties, we are prima facie satisfied that the order passed by the learned Tribunal in the present case as quoted above, does not give proper and detailed findings of facts, nor does it discuss the various amendments of law in this regard and their applicability, of the same to Date of Order 1.8.2018 CEA No.44/2010 Commissioner Of Service Tax Vs. M/S. Lakshminarayana Mining Company 11/12 the facts and circumstances of the case. The learned Tribunal has essentially relied upon the speech of the Finance Minister delivered in the Parliament in the year 2004 only, for holding that the present appellant/assessee was not liable to pay service tax for the aforesaid period, without discussing the relevant provisions of law and the notifications.
10. We therefore, find ourselves not benefitted by the appropriate and proper detailed findings of facts by the learned Tribunal with the relevant provisions of law in this regard. Therefore, we are of the opinion that the matter deserves to be remanded back to the learned Tribunal for decision afresh in accordance with law taking into account various statutory amendments and legal position laid down by the Hon'ble Supreme Court in Laghu Udyog Bharati's case cited supra.
11. Accordingly, we allow the present appeal and set aside the impugned order of the learned Tribunal Date of Order 1.8.2018 CEA No.44/2010 Commissioner Of Service Tax Vs. M/S. Lakshminarayana Mining Company 12/12 dated 25.09.2009 and we remit the matter back to the learned Tribunal for re-deciding the appeal in accordance with law by a detailed, reasoned and speaking order, preferably within a period of six months. The parties without any further notice may appear before the learned Tribunal of the Bangalore Bench, Bengaluru, in the first instance on 16.08.2018. No Costs.
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JUDGE Sd/-
JUDGE PL*