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2025 (5) TMI 1620 - AT - Service TaxDemand along with interest and penalty - services rendered by a goods transport agency GTA - exigible to service tax under reverse charge as per section 68(2) of the Act read with Rule 2(1) (d) (B) (v) of the Service Tax Rules and Notification No. 30/2012-ST - HELD THAT - The well-settled legal position is that to qualify as a GTA one must issue a consignment note by whatever name called. The SCN alleged that the appellant had received GTA services but did not produce any evidence to show that RK Carriers had issued consignment notes. Both the OIO and the impugned order are completely silent on the question of issue of consignment notes. The assertion of the learned counsel was that RK Carriers never issued any consignment notes. The Agreement between the appellant and RK Carriers also does not provide for issue of any consignment notes. As per this Agreement RK Carriers only had to submit running monthly bills for the work done during a month by the 7th of the next month and the appellant would pay the bills after necessary deductions. We find nothing on record to show that RK Carriers issued consignment notes and thus acted as a GTA. The services rendered by RK Carriers do not therefore fall under the reverse charge. The demand of service tax interest and the consequential penalty therefore deserve to be set aside. The impugned order is set aside and the appeal is allowed with consequential relief to the appellant.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Tribunal were:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Qualification of RK Carriers' services as GTA services attracting reverse charge Relevant legal framework and precedents: The Finance Act, 1994, particularly section 68(2), read with Rule 2(1)(d)(B)(v) of the Service Tax Rules and Notification No. 30/2012-ST, mandates that service tax on GTA services is payable under the reverse charge mechanism by the recipient of such services. Section 65B(26) defines a GTA as a person who issues consignment notes for the transport of goods by road. Rule 4B further elaborates the requirement of issuance of consignment notes for such classification. Court's interpretation and reasoning: The Tribunal emphasized the well-settled legal position that issuance of consignment notes is a sine qua non for a transporter to qualify as a GTA. The appellant's counsel asserted that RK Carriers never issued consignment notes, and this was corroborated by the absence of any such provision in the agreement between the appellant and RK Carriers. The agreement stipulated only monthly running bills for services rendered, with no mention or requirement of consignment notes. Key evidence and findings: The agreement between appellant and RK Carriers (pages 105-110 of the appeal book) was examined, revealing no obligation on RK Carriers to issue consignment notes. The show cause notice alleged receipt of GTA services but did not produce evidence of consignment notes issued by RK Carriers. Both the original and appellate orders below were silent on this crucial issue. Application of law to facts: Since RK Carriers did not issue consignment notes, it could not be classified as a GTA under section 65B(26) and Rule 4B. Consequently, the services rendered by RK Carriers did not fall within the ambit of GTA services liable to service tax under reverse charge. The appellant's liability to pay service tax under reverse charge on these services was, therefore, unfounded. Treatment of competing arguments: The Revenue's representative supported the impugned order without addressing the absence of consignment notes. The Tribunal found the appellant's argument on the non-issuance of consignment notes decisive and not rebutted by any contrary evidence. Conclusion: The Tribunal concluded that RK Carriers' services do not qualify as GTA services for the purpose of reverse charge service tax liability. Issue 2: Liability on transport of ash where amount paid per truck was less than Rs. 1,500/- Relevant legal framework: The service tax exemption notifications and rules provide that GTA services where the amount charged per consignment or truck is less than Rs. 1,500/- are exempt from service tax liability. Court's interpretation and reasoning: The appellant contended that transport of ash attracted no service tax as the per truck charges were below the threshold. However, since the Tribunal found that RK Carriers did not qualify as GTA, this issue became redundant. Conclusion: No service tax liability arose on transport of ash under the GTA category, as RK Carriers was not a GTA. Issue 3: Imposition of penalty under section 76 of the Finance Act, 1994 Relevant legal framework: Section 76 provides for penalty imposition for failure to pay service tax or contravention of provisions of the Act. Court's interpretation and reasoning: Since the demand of service tax itself was set aside due to non-qualification of RK Carriers as GTA, the basis for penalty under section 76 fell away. The Tribunal noted that imposing penalty without establishing liability to pay service tax was unjustified. Conclusion: Penalty imposed on the appellant was unwarranted and was set aside accordingly. Issue 4: Entitlement to cum-tax benefit or other reliefs if demand is sustained Analysis: The appellant made alternative submissions seeking cum-tax benefit and other reliefs if the demand was upheld. The Tribunal did not find it necessary to address these submissions in detail since the primary demand was set aside on the fundamental issue of classification of services. 3. SIGNIFICANT HOLDINGS "The well-settled legal position is that to qualify as a GTA, one must issue a consignment note, by whatever name, called." "We find nothing on record to show that RK Carriers issued consignment notes and thus acted as a GTA. The services rendered by RK Carriers do not, therefore, fall under the reverse charge." "The demand of service tax, interest and the consequential penalty, therefore, deserve to be set aside." The Tribunal established the core principle that issuance of consignment notes is indispensable for classification as a GTA under the Finance Act and Service Tax Rules. Without this, service tax under reverse charge on GTA services cannot be levied. Accordingly, the Tribunal set aside the original and appellate orders confirming the demand, interest, and penalty, and allowed the appeal with consequential relief to the appellant.
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