2024 (5) TMI 1195 - AT - Service Tax

Demand of service tax - Classification of Services under GTA - Double Taxation and Refund - Period from April 2015 to June 2017 - HELD THAT - We find that for the earlier period i.e. from October 2010 to March 2015 in the Appellant s own case 2023 (11) TMI 723 - CESTAT ALLAHABAD on the self same issue this Bench of the Tribunal in Service Tax Appeal allowed the appeal of the Appellant. Admittedly in the present case entire tax due has been paid in respect of these transactions between the Appellant and his client. That being so we are of the view that the same transaction could not be levied to service tax both at the hands of the service recipient and the service provider under different category of services. In this case if these transactions were to be taxed under the category of SOTG as has been held by the impugned order entire amount paid by the service recipient under the category of GTA services on the reverse charge basis should have been refunded. There is no scope of double taxation under the statute. The demand made in the present case after noting the payment of tax at the hand of service recipient the same transaction goes contrary to Article 265 of the Constitution and hence cannot be sustained. The Tribunal set aside the impugned order and allowed the appeal filed by the appellant with consequential relief noting that the demand of service tax on merits could not be sustained. Issues of extended period of limitation demand of interest and penalties imposed were deemed irrelevant.

Summary

Issues Involved:
1. Demand of Service Tax for the period April 2015 to March 2016.
2. Demand of Service Tax for the period April 2016 to June 2017.
3. Nature of the transaction and classification under Goods Transport Agency (GTA) services.
4. Double taxation and its constitutional validity.

Issue 1: Demand of Service Tax for the period April 2015 to March 2016

The learned Commissioner confirmed the demand of Service Tax amounting to Rs. 1,77,97,667/- against M/s Pranish Carriers LLP u/s 73(2) of the Finance Act, 1994. Interest at the appropriate rate was confirmed u/s 75, and a penalty of Rs. 1,77,97,667/- was imposed u/s 78 for willful contravention of statutory provisions. Additionally, a penalty of Rs. 10,000/- was imposed u/s 77(1)(a).

Issue 2: Demand of Service Tax for the period April 2016 to June 2017

The learned Commissioner confirmed the demand of Service Tax amounting to Rs. 2,67,22,126/- against M/s Pranish Carriers LLP u/s 73(2) of the Finance Act, 1994. Interest at the appropriate rate was confirmed u/s 75, and a penalty of Rs. 26,72,213/- was imposed u/s 76. Additionally, a penalty of Rs. 10,000/- was imposed u/s 77(1)(a).

Issue 3: Nature of the transaction and classification under Goods Transport Agency (GTA) services

The Tribunal found that for the earlier period (October 2010 to March 2015), in the Appellant's own case, the transaction was classified under GTA services. The Tribunal noted that the appellant issued consignment notes for transportation, which established that the service provided was GTA. This was supported by various precedents, including the case of Commissioner of Central Excise and Service Tax, Dhanbad Vs M/s Bharat Coking Coal Ltd., where it was held that transportation services without consignment notes could not be classified under GTA services.

Issue 4: Double taxation and its constitutional validity

The Tribunal observed that the same transaction could not be levied to service tax both at the hands of the service recipient and the service provider under different categories of services. If the transactions were taxed under Supply of Tangible Goods (SOTG) as held by the impugned order, the amount paid by the service recipient under GTA services should be refunded. Double taxation is contrary to Article 265 of the Constitution and hence cannot be sustained.

Conclusion

The Tribunal set aside the impugned order, stating that the demand of service tax on merits is unsustainable. Issues of extended period of limitation, demand of interest, and penalties imposed were deemed irrelevant. The appeal filed by the Appellant was allowed with consequential relief.