2007 (9) TMI 55 - AT - Service Tax

GTI - Issue of consignment note is mandatory under Rule 4B it is responsibility of the good recipient to receive the good in proper form- levy of service tax can t be challenged on the ground of transporters being illiterate or there is an administrative difficulty

Summary

Issues:
- Liability to discharge Service tax in the absence of a consignment note.
- Interpretation of Rule 4(B) of Service Tax Rules.
- Obligation of transporters to issue consignment notes.
- Applicability of Service tax on freight incurred.
- Compliance with Notification No. 35/2004 dated 3-12-2004.

Liability to discharge Service tax in the absence of a consignment note:
The case involved a dispute regarding the liability of the appellants to discharge Service tax in the absence of a consignment note issued by transporters. The Assistant Commissioner clarified that failure to take the consignment note could lead to penalties under Rule 4(8) of Service Tax Rules. The Commissioner (A) upheld the demand for Service tax, emphasizing that the issue of a consignment note is mandatory for the transportation of goods, as it signifies a commercial activity. The Commissioner dismissed the appeal, affirming the lower adjudicating authority's decision.

Interpretation of Rule 4(B) of Service Tax Rules:
The appellants argued that the transport operators in question did not fall under the definition of goods transport agency as per Section 65(b) of the Finance Act. They contended that since the transport operators did not issue consignment notes as defined in Rule 4(B) of Service Tax Rules, their services should not be taxable. However, the Departmental representative asserted that payment of Service tax is the responsibility of the party making the freight payment, as specified in Notification No. 35/2004 dated 3-12-2004.

Obligation of transporters to issue consignment notes:
The appellants claimed that the transporters, many of whom were illiterate, were not accustomed to issuing consignment notes. They presented scenarios where consignment notes were not issued, arguing that in such cases, the services provided did not fall under the purview of goods transport agency and should not be taxable. However, the Commissioner (A) held that the issue of a consignment note is mandatory for any commercial transportation activity, and failure to do so could attract Service tax liability.

Applicability of Service tax on freight incurred:
The Departmental representative contended that the liability to pay Service tax arises when the consignor or consignee falls under the specified categories in the relevant notification. The Commissioner (A) emphasized that once freight is charged for the transportation of goods, it constitutes a commercial activity, making it subject to Service tax.

Compliance with Notification No. 35/2004 dated 3-12-2004:
The case highlighted the importance of complying with Notification No. 35/2004 dated 3-12-2004, which specified the categories of persons liable to pay Service tax. The Commissioner (A) reiterated the necessity of adhering to statutory provisions and emphasized that administrative difficulties or illiteracy cannot excuse non-compliance. The appeals were rejected on the grounds that statutory provisions must be strictly followed, regardless of any inconveniences faced by the appellants.