2016 (4) TMI 154 - AT - Service Tax

Demand of Service tax and imposition of penalty - Commission received liable to tax under business auxiliary service - Engaged in the business of transportation as well as providing transportation to their clients by hiring truck/vehicles from others on commission basis - Department claimed that the service tax liability on such transportation of goods to and fro Bajaj Auto Limited is discharged by M/s Bajaj Auto Limited, being one of the persons required to discharge the service tax liability under reverse charge - Held that - the findings of the lower authorities that the activity of getting commission on the trucks hired form various outsiders would fall under the under the category of commission agent for provision or receipt of service for a consideration is incorrect for more than one reason as the final service rendered by the appellant to M/s Bajaj Auto Limited is Goods Transport Agency . Therefore, the activity if it is taxed under a particular head any amount received such activity, cannot be considered again under business auxiliary service as the appellant is not providing any service in relation to business auxiliary service. - Decided in favour of appellant

Summary

Issues:
Challenge to Order-in-Appeal confirming demand of service tax, interest, and penalties for transportation services provided by the appellant.

Analysis:
The appellant, engaged in transportation and providing transportation services to clients by hiring trucks on commission basis, faced a demand for service tax for the period 2003-04 to 2005-06. The lower authorities perceived the commission received from truck owners as taxable under business auxiliary services. The adjudicating authority confirmed the demands and penalties, upheld by the first appellate authority.

The appellant argued that the commission received was not for business auxiliary services as they primarily operated as a transport agency, issuing consignment notes for transportation. They contended that the consignment notes clearly indicated the tax liability to be discharged by the client, Bajaj Auto Limited. The appellant hired trucks from various individuals, including relatives, and received a portion of the amount paid to them as commission, which they accounted for separately.

The departmental representative maintained that the appellant's activities fell under the definition of a "commission agent" as per business auxiliary services. However, upon reviewing the submissions and records, the Tribunal found that the appellant operated as a Goods Transport Agency, issuing consignment notes for transportation services to Bajaj Auto Limited. The service tax liability was discharged by Bajaj Auto Limited under reverse charge mechanism. The Tribunal disagreed with the lower authorities' classification of the commission as falling under business auxiliary services, as the primary service provided was transportation, not business auxiliary services.

Consequently, the Tribunal held that the impugned order confirming the demand of service tax, interest, and penalties was unsustainable and set it aside, ruling in favor of the appellant.