9911796707
TMI Blog2009 (12) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) Service tax under section 73(1) of the Finance Act, 1994 (the Act) : Rs. 72,85,191 and applicable interest. (ii) Penalty under section 76 of the Act : Rs. 200 per day (iii) Penalty under section 77 of the Act : Rs. 1,000 (iv) Penalty under section 78 of the Act : Rs. 74,30,895 Period of dispute : 1-1-2005 to 31-3-2006 3. In the orders impugned in the remaining appeals similar penalties have been imposed in addition to the demands of tax confirmed as per the following details : A. Appeal No. ST/691/08 filed by M/s. MSPL Ltd., Unit-I. Service tax under section 73(1) of the Act : Rs. 469 and applicable interest. Period of dispute : 1-4-2006 to 31-3-2007 B. Appeal No. ST/692/08 filed by M/s. MSPL Ltd., Unit-II. Service tax under section 73(1) of the Act : Rs. 62,528 and applicable interest. Period of dispute : 1-4-2006 to 31-3-2007 C. Appeal No. ST/652/08 filed by M/s. MSPL Ltd. Service tax under section 73(1) of the Act : Rs. 7,37,422 and applicable interest. Period of dispute : 1-4-2006 to 31-3-2007 D. Appeal No. ST/653/08 filed by M/s. Ramgad Minerals & Mining Pvt. Ltd. Service tax under section 73(1) of the Act : Rs. 2,51,634 and interest Rs. 46,703 Period of dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) In terms of CBEC Circular No. 232/2/2006-CX.4, dated 12-11-2007 the activity of handling and transportation of iron ore within the mine and transportation outside the mines were liable to service tax under "cargo handling service" and goods transport by road. The handling of export cargo was excluded from the purview of "cargo handling service" in terms of its definition under section 65(23) of the Act. (d) The supply of trucks by the owners without transferring legal right of possession and effective control was a taxable service under the head "supply of tangible goods" as defined under section 65(105)(zzzzj) of the Act effective from 16-5-2008 and that the service provider was liable to pay service tax (under that head). (e) The amounts paid to the lorry owners were much less than Rs. 1,500 per trip and hence came within the exemption limit prescribed under clause (i) of Notification No. 34/2004-ST, dated 3-12-2004 and no service tax was payable. (f) The actual amounts paid to the lorry owners for the service during the period from 1-1-2005 to 31-1-2005 was Rs. 3,02,74,385 and not Rs. 7,70,61,270 and hence the value of taxable service adopted was erroneous. (g) The Departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of goods by road per se, but on the service of GTA "in relation to" transportation of goods by road in a goods carriage as defined under section 65(105)(zzp) of the Act. Transportation of goods by truck owners/transporters without engagement/involvement of Transport Booking Agent or Goods Transport Agency was not liable to service tax. (l) The "owner" of the goods carriage could not be said to be "goods transport agent" of the owner. The taxable service of GTA under section 65(105)(zzp) "is to a customer, by a goods transport agency, in relation to transportation of goods in a goods carriage". Accordingly, the same person could not be "owner" of the goods carriage as well as his own "agent". (m) On 8-7-2004, the Hon'ble Union Minister of Finance while presenting the Union Finance Bill, 2004-05 had categorically stated in Para 149 that there was no intention to levy service tax on truck owners or truck operators. The same issue was earlier examined by the Tribunal in the case of MSPL Ltd. v. CCE [2009] 20 STT 384 (Bang. - CESTAT). The Tribunal had held, "From the above, it is clear that the legislative intent is to tax only the services provided by a Goods Transport Agent to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : '(zzzzj) to any person, by any other person in relation to supply of tangible goods including machinery, equipment and appliances for use, without transferring right of possession and effective control of such machinery, equipment and appliances;' Notification No. 29/2008-ST, dated 26-6-2008 exempted the taxable service of supply of goods carriage without transferring the possession and effective control of such goods as referred to in sub-clause (zzzzj) of clause (105) of section 65 provided by any person to a Goods Transport Agency for use by the said GTA to provide any service as referred to in section 65(105)(zzp) to a customer in relation to transportation of goods by road in the said goods carriage from the whole of service tax. Notification thus clearly brought out the distinction between the "owner" of the vehicles and "goods transport agency", and the service of "supply of vehicle" for use and "service of GTA in relation to" transportation of goods by road in a goods carriage were independent services. (p) Exemption under Notification No. 34/2004, dated 3-12-2004 :- (i) It is argued that in case they were held liable to pay service tax under GTA, the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id in January 2005 were for hiring of lorries for the period prior to 1-1-2005, during which period there was no levy of service tax, an amount of Rs. 2,17,60,451 had been paid to the CHA on which service tax had already been paid and the amount of Rs. 35,10,650 had been paid to the GTA (other than lorry owners) which had already suffered service tax. The appellants submitted that the actual amounts paid to the lorry owners for the service during the period from 1-1-2005 to 31-1-2005 was Rs. 3,02,74,385. (r) The SCN issued on 24-5-2007 proposed to demand service tax on freight charges paid to truck owners or operators during the period from 1-1-2005 to 31-3-2006. The notice stated that the Audit Party of the department while conducting the audit of the assessee's records during February 2006 had noticed that for payment of service tax for the period from 1/05 to 1/06, the assessee had excluded payments made to the lorry owners from the gross value of taxable service for calculating the service tax in respect of the service of GTA. The audit objection had been communicated to the assessee and that the assessee in their reply dated 15-5-2006 had informed the jurisdictional Super ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice was on the appellant who was a service receiver liable to pay the tax on the subject service. The question as to whether the truck owners/transporter was an agency or not as defined in section 65(50b) of the Finance Act, 1994 arose only when the onus of payment of service tax was on the transporter himself. Only then, came the question of identifying as to whether the transporter was an agency issuing consignment notes etc. In the instant case, the freight was paid by the appellant and as per said notification, they were liable to discharge service tax liability on GTA service. Further, it was common understanding that a lorry/truck carrying iron ore plied only on roads. 6.1 The CBEC Circular No. 232/2/2006-CX.4, dated 12-11-2007 stated that the activities were chargeable to tax either under 'cargo handling service' or 'goods transport by road' service. Further the circular clarified that if the transportation was undertaken by mechanical systems such as conveyors, rope system, merry go rounds, then only the service tax was chargeable under 'cargo handling service'. In other words, the goods if transported by road/by truck, then they were chargeable u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even if the impugned activity involved constituted GTA service, the same was exempt under Notification No. 34/04-ST, dated 3-12-2004 since the amount paid per trip per truck was less than Rs. 1,500 in case of all consignments. Yet another argument raised is that the transportation carried out for the appellants had taken place within the mine and was not by road. The word 'road' figuring in the section 65(105)(zzp) of the Act had to be understood as referring to public road. In the instant case, therefore, the transportation by mud roads formed in the mining area could not be held to be transportation by road, which alone was taxable service under GTA. 8. It is seen from the show-cause notice that the appellants had availed the service of transportation of goods from owners of lorries during the period of dispute. The Commissioner went to pains to establish that the impugned service had bean rendered by a commercial concern and therefore constituted taxable service under GTA. We find that the activity subject to tax under the entry GTA was clarified by the Hon'ble Finance Minister in his Budget Speech (Clause 149 of the Finance Bill, 2004-05) wherein he stated as foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance Act, provided by any person to a goods transport agency for use by the said goods transport agency to provide any service, referred to in sub-clause (zzp) of clause (105) of section 65 of the Finance Act, to a customer in relation to transport of goods by road in the said goods carriage, from the whole of the service tax leviable thereon under section 66 of the Finance Act. From the above, we find that the notification exempts the taxable service of supply of goods carriage provided by any person to GTA for use by the said GTA to provide any service referred to in sub-clause (zzzzj) of clause (105) of section 65 of the Finance Act, 1994 to a customer in relation to transport of goods by road in the said goods carriage. It is thus abundantly clear that the GTA of entry (zzp) of clause (105) of section 65 operates goods carriage not owned by it. GTA is a transport company undertaking not merely transportation. Therefore, the impugned activity rendered by truck owners is necessarily outside the ambit of the entry GTA. 12. As regards exemption extended under Notification No. 734/2004, dated 3-12-2004, the Commissioner held that the consignments meant for the same consignee could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nments transported in a goods carriage does not exceed rupees one thousand five hundred; or (ii) the gross amount charged on an individual consignment transported in a goods carriage does not exceed rupees seven hundred fifty. Explanation.-For the purposes of this notification, 'an individual consignment' means all goods transported by a goods transport agency by road in a goods carriage for a consignee. 2. This notification shall come into force on the 1st day of January, 2005. Notification No. 34/2004 grants full exemption from service tax in the following two situations:- (i) the gross amount charged on consignments transported in a goods carriage does not exceed rupees one thousand five hundred; or (ii) the gross amount charged on an individual consignment transported in a goods carriage does not exceed rupees seven hundred fifty. 12.1 In view of the clear language of the Explanation to 'individual consignment' used in the notification, the exemption is obviously admissible to goods of transported as a single consignment for which the freight charged is not above Rs. 750. Where the goods carriage transports several consignments, the exemption will be avai ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
