2023 (9) TMI 718 - AT - Service Tax

Liability of Service Tax on GTA service - Reverse Charge - transportation charges paid by the appellant on behalf of the buyers of coal to the Goods Transport Agency - Intermediary services - benefit of N/N. 32/2004-ST dated 03.12.2004 as amended - HELD THAT - The Tribunal had directed the adjudicating authority to examine the evidence available with the Department as well as the evidence that may be submitted by the appellant to verify the claim that the service tax on transportation had been paid by the buyers/consignees of the coal. The Tribunal in the remand order has observed that if the service tax for transportation from mines to washery is paid by the buyer of the coal then there is no liability on the appellant. The impugned order has to be examined through the prism of the remand order. The Tribunal in its order has very clearly directed the adjudicating authority to consider the evidence available with Revenue and the evidence that may be submitted by the appellant - The Tribunal had directed the adjudicating authority to examine the documents available with Revenue such ST-3 returns of all these consignees. The authority could have called for the connected invoices/Tax deposit Challans to ascertain payment. The adjudicating authority had to co-relate the same with the evidence that may be submitted by the appellant. It is to be noted that the Tribunal has carefully used the term may for the appellant and the responsibility was placed on Revenue to examine the documents which were available with the Department. The department could have obtained the copy of the relevant ledgers invoices etc. from the consignees through the jurisdictional Range officers. This has not been done by the adjudicating authority which clearly shows that he has not followed this Tribunal s remand order in letter and spirit. The Revenue has failed miserably to lead any evidence despite specific orders by this Tribunal. Secondly having considered the issue on merits we are of the firm opinion that the appellant acted as an agent or an intermediary between the seller of coal i.e. SECL and the buyer of the coal - it is also found from the evidence led by the appellant that SECL was the consignor and buyers of the coal were consignees and referring to large number of instances where the incidence of freight was actually borne by the consignees and which has not been disputed by the Revenue it is the buyers of the coal who are liable to make the payment of service tax on freight amount paid to the transporter for transportation of coal in terms of Rule 2(1)(d) 21(v) of Service Tax Rules 1994. The impugned order set aside - appeal allowed.

Summary

Issues Involved:
1. Liability of service tax payment on transportation charges.
2. Compliance with Rule 2(1)(d)(v) of the Service Tax Rules, 1994.
3. Verification of service tax payment by consignees.
4. Invocation of extended period of limitation.
5. Benefit of Notification No. 32/2004-ST.

Summary:

1. Liability of Service Tax Payment on Transportation Charges:
The appellant, a coal beneficiation company, was charged with a service tax demand of Rs. 3,16,08,381/- for transportation charges paid to M/s Jai Jagdish Transport. The Department contended that the appellant was liable to pay service tax on these charges, while the appellant argued that the buyers of coal (consignees) were responsible for the tax as per Rule 2(1)(d)(v) of the Service Tax Rules, 1994.

2. Compliance with Rule 2(1)(d)(v) of the Service Tax Rules, 1994:
The appellant functioned as an intermediary between the seller (SECL) and the buyers of coal. The buyers were the actual consignees and bore the incidence of freight. The Tribunal's earlier remand order required the adjudicating authority to verify if the service tax on transportation was paid by the buyers. The appellant provided evidence, including challans and undertakings from consignees, confirming the payment of service tax.

3. Verification of Service Tax Payment by Consignees:
The adjudicating authority was directed to examine evidence from both the Department and the appellant. The appellant submitted challans and undertakings from 27 consignees, confirming service tax payments. However, the adjudicating authority rejected this evidence, citing insufficient documentation. The Tribunal found this rejection mechanical and noted the Department's failure to verify documents through jurisdictional officers.

4. Invocation of Extended Period of Limitation:
The appellant argued against the invocation of the extended period, stating that they regularly paid service tax on coal washing charges and filed ST-3 returns. The Department was aware of all relevant facts, and nothing was concealed.

5. Benefit of Notification No. 32/2004-ST:
The appellant was eligible for the benefit of Notification No. 32/2004-ST, subject to conditions. The adjudicating authority claimed the appellant failed to produce necessary evidence, such as certificates from the transport agency. The Tribunal found that the Department did not adequately verify the appellant's claims.

Conclusion:
The Tribunal concluded that the appellant acted as an intermediary between SECL and the buyers of coal. The buyers, as consignees, were liable for the service tax on transportation charges. The Tribunal set aside the impugned order and allowed the appeals, emphasizing that double taxation should be avoided and the Department failed to follow the remand order properly.

(Pronounced in Court on 13.09.2023)