2025 (7) TMI 75 - AT - Service Tax

Levy of service tax - goods transportation agency services - transportation of goods by way of hiring leasing licencing etc. without transfer of right to use such goods - period from April 2013 to March 2017 - reverse charge mechanism - HELD THAT - The nature of service can easily be identified from the terms of agreement executed between the Appellant and its customer M/s. INOXAP. Invariably throughout the agreement reference is made to provisions for transportation of goods on payment with different conditions but nowhere there is any reference to any fixed collection of lease-rental by the Appellant from its customer M/s INOXAP. Payment is made purely on the basis of bill of transportation submitted in prescribed format for the whole month and not for leasing or renting of specialised Lorry Chassis by the Appellant with customer M/s. INOXAP for which we find the decisions passed in the case of M/s. Pranish Carriers LLP cited supra are squarely applicable to the case of Appellant. Further invoice and Consignment note being two separate kinds of documents there is no requirement that full description including address lorry numbers etc. should be available in the invoice when content of Consignment note is itself referred in the statute. The impugned order is set aside - appeal allowed.

Summary

The core legal questions considered in this appeal revolve around the classification of the service provided by the appellant for the period from April 2013 to March 2017. Specifically, the issues are:

• Whether the appellant's activity constitutes a 'Goods Transport Agency' (GTA) service as contended by the appellant or a declared service of 'transfer of goods by way of hiring, leasing, licensing etc. without transfer of right to use such goods' under Section 66E(f) of the Finance Act, 1994, as held by the Commissioner.
• The validity of the Service Tax demand, interest, and penalties imposed by the Commissioner on the appellant for the said period.
• The evidentiary value and sufficiency of documents such as consignment notes and invoices in establishing the nature of the service.
• The applicability and binding nature of precedents, particularly decisions from CESTAT Allahabad, on the present case.

Issue-wise Detailed Analysis:

1. Classification of Service: GTA Service vs. Declared Service under Section 66E(f)

Relevant Legal Framework and Precedents: Section 66E(f) of the Finance Act, 1994, defines a declared service as "transfer of goods by way of hiring, leasing, licensing or in any other manner without transfer of right to use such goods." The appellant asserts that the service provided is a GTA service, which is taxable differently and involves issuance of consignment notes, whereas the department contends it is a declared service attracting different tax implications.

Precedents from CESTAT Allahabad in the cases involving M/s. Pranish Carriers LLP are pivotal. In those cases, the Tribunal held that transportation of industrial gases in Vacuum Insulated Transport Tanks (VITT) mounted on lorry chassis, under a contract involving issuance of consignment notes, qualifies as GTA service and not renting or leasing.

Court's Interpretation and Reasoning: The Tribunal examined the terms of the contract between the appellant and its customer. The agreement explicitly refers to transportation of goods on payment terms without any mention of lease or rental payments for the lorry chassis. The payment structure is based on monthly bills for transportation services rendered, with weekly payments for running expenses like diesel and toll taxes. This payment mechanism indicates a service contract for transportation rather than a lease or hire of goods.

The Tribunal noted that the appellant issues consignment notes, a key document characterizing GTA services. The Commissioner's suspicion that consignment notes were issued post-facto was found to be a presumption unsupported by evidence.

Key Evidence and Findings: The contract terms, payment schedule, and issuance of consignment notes were critical. The absence of a fixed lease or rental charge and the presence of transportation bills in a prescribed format supported the appellant's claim. The Tribunal also distinguished between invoices and consignment notes, emphasizing that detailed consignee information is not mandatorily required in invoices if the consignment note contains such details.

Application of Law to Facts: Applying the statutory definition and the precedents, the Tribunal concluded that the appellant's service falls within the ambit of GTA services. The contractual terms and documentary evidence did not support the classification as a declared service under Section 66E(f).

Treatment of Competing Arguments: The department's reliance on the absence of detailed consignee information in invoices was rejected as invoices and consignment notes serve different statutory functions. The Tribunal also rejected the Commissioner's presumption regarding the timing of consignment note issuance due to lack of evidence.

Conclusion: The Tribunal held that the appellant's activity is GTA service and not a declared service under Section 66E(f).

2. Legality of Service Tax Demand, Interest, and Penalties

Relevant Legal Framework: The demand was confirmed under Section 78 (penalty equal to service tax), along with penalties under Sections 77 and 70 of the Finance Act, 1994.

Court's Interpretation and Reasoning: Since the Tribunal found the service to be GTA service, the basis for the demand under the declared service category was invalidated. Consequently, the demand for service tax, interest, and penalties premised on that classification could not stand.

Key Evidence and Findings: The appellant's compliance with service tax under Reverse Charge Mechanism as a service recipient was noted, and no evidence of evasion or misdeclaration was found.

Application of Law to Facts: The misclassification by the Commissioner led to erroneous demand and penalties. The Tribunal set aside the entire order confirming the demand and penalties.

Treatment of Competing Arguments: The department's argument that the demand was justified due to incorrect classification was rejected based on the detailed analysis of the contract and precedents.

Conclusion: The Tribunal allowed the appeal and set aside the demand, interest, and penalties with consequential relief.

3. Evidentiary Role of Consignment Notes and Invoices

Relevant Legal Framework: Statutory provisions recognize consignment notes as essential documents evidencing GTA services.

Court's Interpretation and Reasoning: The Tribunal emphasized that consignment notes and invoices are distinct documents serving different purposes. The absence of detailed consignee information in invoices does not invalidate the consignment notes or the nature of service.

Key Evidence and Findings: The appellant's issuance of consignment notes was acknowledged and accepted as legitimate evidence of GTA services.

Application of Law to Facts: The Tribunal relied on the statutory recognition of consignment notes to affirm the appellant's service classification.

Treatment of Competing Arguments: The Commissioner's skepticism regarding the timing and content of consignment notes was dismissed as baseless.

Conclusion: Consignment notes issued by the appellant were sufficient proof of GTA service.

4. Applicability of Precedents from CESTAT Allahabad

Relevant Legal Framework and Precedents: The appellant relied on two decisions from CESTAT Allahabad involving similar facts and contractual terms where transportation of industrial gases using VITT mounted on lorry chassis was held to be GTA service.

Court's Interpretation and Reasoning: The Tribunal found these precedents directly applicable and noted that the Department had accepted those orders without appeal, indicating their binding effect.

Key Evidence and Findings: Identical contractual provisions and similar transportation arrangements in those cases supported the appellant's position.

Application of Law to Facts: The Tribunal applied the ratio decidendi of those precedents to the present facts, reinforcing the classification of the service as GTA.

Treatment of Competing Arguments: The department's failure to challenge those precedents weakened its stance.

Conclusion: The precedents decisively favored the appellant's classification of the service.

Significant Holdings:

"The nature of service can easily be identified from the terms of agreement executed between the Appellant and its customer. Invariably throughout the agreement, reference is made to provisions for transportation of goods on payment with different conditions but nowhere there is any reference to any fixed collection of lease-rental by the Appellant from its customer."

"Invoice and Consignment note being two separate kinds of documents, there is no requirement that full description including address, lorry numbers etc. should be available in the invoice, when content of Consignment note is itself referred in the statute."

"The appeal is allowed and the order passed by the Commissioner ... is hereby set aside with consequential relief, if any."

Core principles established include the primacy of contract terms in determining the nature of service, the distinct statutory roles of consignment notes and invoices, and the binding effect of Tribunal precedents on identical facts. The final determination was that the appellant's service constitutes GTA service, and the demand, interest, and penalties imposed under the declared service classification were set aside.