TMI Blog2009 (12) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, he is not eligible for exemption. In the circumstances, in which the assessee availed service of transportation by goods carriage not operated by GTA, were not liable to tax under the head ‘Goods Transport Agency Services’. - ST/651 TO 653, 691, 692 OF 2008 & 102 OF 2009 - 1535 TO 1540 OF 2009 - Dated:- 30-12-2009 - M.V. RAVINDRAN, JUDICIAL MEMBER AND P. KARTHIKEYAN, TECHNICAL MEMBER K.S. Ravishankar, N. Anand and M.S. Nagaraja for the Appellant. Ms. Sudha Koka for the Respondent. ORDER P. Karthikeyan, Technical Member - These are appeals filed by M/s. Bellary Iron Ores Pvt. Ltd. (ST/651/08), M/s. MSPL Ltd. (ST/691/08, ST/692/08, and ST/652/08), M/s. Ramgad Minerals Mining Pvt. Ltd. (ST/653/08) and M/s. The Sandur Manganese Iron Ores Ltd. (ST/102/09). The common issue involved in all these appeals is whether the freight paid to owners and operators of trucks for transportation of goods by road is exigibie to service tax under the head 'Goods Transport Agency' service. 2. The order impugned in Appeal No. ST/651/08 filed by M/s. Bellary Iron Ores Pvt. Ltd. (BIOL) confirmed the following liabilities against it : (i) Service tax un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. In the other appeals, the goods transported were iron ore or mining products including waste products within the mining area. In these cases also demands were raised on similar grounds and exemption under the two Notifications similarly allowed, except in the case of M/s. The Sandur Manganese Iron Ore Ltd. (ST/102/09) wherein the appellants were not allowed abatement of 75 per cent of the tax for the appellant failing to produce consignment notes with the declaration in respect of each consignment as per the Notification No. 36/04-ST or its successor Notification No. 1/06-ST and the relevant Circular of CBEC. 5. BIOL has raised the following grounds in the appeal : (a) The owners of trucks were not Goods Transport Agency or transport booking agents rendering service in relation to transportation of iron ore by road in a goods carriage as defined under section 65(50b) of the Act and taxable service defined under section 65(105)(zzp) of the Act (since 1-5-2006). (b) Movement of iron ore within the mine during the processing or production of iron ore products was not by road as was commonly understood and hence such movements did not come within the scope of service of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce had proceeded on the premise that transporters were actually owners of vehicles. The assessee thus did not need to prove the same fact any further. The main issue was whether owners of vehicles having provided the service of transportation came within the scope of Goods Transport Agency . Section 65(105)(zzp) of the Finance Act, 1994 defined taxable service provided by a GTA as under : (zzp) to a customer, by a goods transport agency, in relation to transport of goods by road in a goods carriage; The term Goods Transport Agency is defined under section 65(50b) of the Act as under : (50b) goods transport agency means any (commercial concern which)* provides service in relation to transport of goods by road and issues consignment note, by whatever name called; (*Substituted by the words 'person who' from 1-5-2006) (j) The definitions of Goods Transport Agency and taxable service provided by a GTA made it clear that only the services of an agency providing services in relation to transportation of goods by road were liable to service tax. It was clear that mere transportation of goods by road per se was not a taxable service. (k) The incidence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , rockers and tractors were motor vehicles within the meaning of the relevant Bihar and Orissa Motor Vehicles Taxation Act (2 of 1930) it was held that having regard to the context of the definition of public place in section 2(24) of the Indian Motor Vehicles Act, the regulatory character of that act, and the use of the word road used in a public act, road would mean a public road . The Commissioner had not recorded any findings on this plea of BIOL. The reference to transport of goods by road in a goods carriage in section 65(50b) and section 65(105)(zzp) of the Act was thus to transport of goods by public road in a goods carriage. The transportation of goods within the private mines, where there were no roads, was not a taxable service under the classification of GTA. (o) The truck owners, not being GTA, had hired their trucks for use for transportation of iron ores within the mining area. The transaction was of hiring of trucks without transferring the right of possession and control over the trucks. The activity of supply of trucks without transferring right of possession and effective control was a service of supply of tangible goods . Section 65(105)(zzzzj) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot exceed Rs. 1,500 the assessee was eligible for exemption under clause (i). The assessee came within the plain language of exemption under clause (i). Therefore, the assessee was eligible for exemption on freight charges paid up to Rs. 1,500 per trip/truck load of iron ore transported. Clause (ii) would apply only when there were a number of consignments for multiple consignees. The explanation for the expression individual consignment appearing in clause (ii) of the notification was not applicable where exemption for freight charges up to Rs. 1,500 was available under clause (i). In case the Department's contention was to be accepted, then the exemption of freight charges up to Rs. 1,500 under clause (i) would never be available when goods were consigned to a consignee. That could not have been the intention of the Government. The notification required both strict and purposive interpretation so that the benefit intended was extended. (q) The appellants had submitted that Para 5 of the SCN had shown the freight charges of Rs. 7,70,61,270 as paid to the lorry owners during the period from 1-1-2005 to 31-1-2005 based on the statement of Sri A Raghavendra. The appellants h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder rule 5 of the CENVAT Credit Rules, 2004. (t) The appellants had paid service tax on the services of GTA for inward and outward transportation of goods. They had not included the value of transportation within the mine in the total value of service of GTA. The taxability and classification of service of transportation of iron ores within the mine area was a matter of interpretation of law. The CBEC Circular dated 12-11-2007 had classified the said activity within the mine area as coming under cargo handling service , which excluded export goods and the Commissioner, contrary to the instructions of the Board had classified the same under GTA. The Larger Bench of the Tribunal in the case of ETA Engineering Ltd. v. CCE [2007] 8 STT 61 (New Delhi - CESTAT) had held that when there was bona fide doubt as to taxability of service, there was reasonable cause for not depositing service tax and that penalties were not imposable in view of section 80 of the Act. It is submitted that the penalties imposed under section 76, section 77 and section 78 were required to be set aside by invoking section 80 of the Finance Act, 1994. 6. Revenue has submitted that as per Notification No. 34 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refully studied the case records and considered the rival submissions. The dispute involved in this case is mainly whether transportation of goods by road using a goods carriage by an owner of the goods carriage is exigible under the category GTA. The impugned demands are raised and penalties imposed on the basis that the services involved are correctly classifiable under the head GTA. That the services were not exigible to service tax during the material period is also canvassed on the basis that the activity involved was supply of tangible goods brought under tax net vide section 65(105)(zzzzj) of the Act with effect from 16-5-2008. Therefore the same activity was not taxable under another entry prior to that date. The appellants also argued that the demand was barred by limitation for the reason that the internal audit party of the department had visited the appellants and scrutinized their records in February, 2006; they had noticed that the appellants had not paid service tax on payments made to the lorry owners for the period from 1/05 to 1/06, the period of dispute. Therefore, suppression of facts could not have been validly invoked in the show-cause notice issued on 24-5- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Apex Court held that the expression 'road' appearing in a regulatory act like the one they had considered, could connote only a public road in view of the definition to 'public place' appearing in that act. We find that the ratio of the said judgment rendered when the Apex Court examined provisions of Bihar and Orissa Motor Vehicles Taxation Act does not apply to read the provisions of the Finance Act, 1994. We reject this plea of BIOL. 11. BIOL advanced arguments in support of their claim relying on the entry supply tangible goods at (zzzzj) of clause (105) of section 65 and exemption Notification No. 29/2008-ST, dated 26-6-2008. This notification reads as follows : Levy of service tax on supply of goods carriage to GTA for use in transportation of goods by road waived - In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as 'the Finance Act'), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service of supply of a goods carriage, without transferring right of possession and effective control of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid in all cases where the gross amount charged/paid on an individual consignment transported in a goods carriage exceeded Rs. 750. BIOL has argued that the notification extended two types of exemption under the clauses (i) and (ii). It is argued that BIOL was eligible for exemption when the goods carriage transported only a single consignment belonging to BIOL and freight paid was up to Rs. 1,500. The explanation for the expression individual consignment appearing in clause (ii) of the notification was not applicable for exemption under clause (i) where freight charged was up to Rs. 1,500. Let us examine the exemption under this notification. Notification No. 34/2004, dated 3-12-2004 is reproduced below : Goods Transport agency - Exemption on taxable service relating to small and single consignments - In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service provided by a goods transport agency to a customer, in relation to transport of goods by road in a goods carriage, from the whole of service ..... X X X X Extracts X X X X X X X X Extracts X X X X
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