Supply Of Tangible Goods Can't Be Regarded As GTA Service: CESTAT

The Customs, Excise & Service Tax Appellate Tribunal, Ahmedabad held that the supply of tangible goods can’t be regarded as GTA service.

The tribunal found that the appellant has received transportation service in respect of supply of building material and in some of the cases the transporter itself has raised the bill for supply of material and not for transportation and in all the cases of transportation, there is no consignment note issued by the transporter. In one case there is supply of tangible goods which cannot be regarded as GTA service.

The bench stated that as regards the major demand categorized under GTA service which are liable for service tax or otherwise, in number of judgments it has been held that even though there is transportation service but if no consignment note has been issued, the said service cannot be classified as GTA service.

Facts

The appellant is a partnership firm and is engaged in providing taxable service under the category of ‘Construction of Commercial or Industrial Building and Civil Structure‘ as defined under Section 65 of the Finance Act, 1994.

During the course of audit of the financial records of the assessee for the Financial Year 2010-11 to 2012-13, it is observed that the appellant had made payment towards freight charges for the transportation of goods but no service tax has been paid by them.

Accordingly, a show cause notice was issued to the appellant proposing demand of service tax under the category of GTA Service under reverse charge mechanism along with interest and penalty.

The said show cause notice was adjudicated by the Adjudicating Authority vide order whereby the proposal made in the show cause notice has been confirmed and demand of service tax along with interest and imposition of penalties under Section 77 and 78 was confirmed.

Submissions

Jigar Shah, Counsel with Amber Kumarawat, Advocate appearing for the appellant, submitted that though the appellant have received transportation service but no consignment note was issued by the transporters. It is trite law that to classify transporter service under GTA service, it is necessary that the transporter issues consignment note. However, no consignment note was issued therefore, as per the statutory provisions, the service of transportation cannot be classified under GTA service.

He further submitted that some of the transactions of supply of tangible goods as well as supply of material such as kapchi, white sand etc. which is nothing but sale of goods therefore, the Adjudicating Authority has wrongly included those transaction assuming GTA service. Therefore, those transactions which are other than pure transportation cannot be classified under GTA service.

He urged that the issue involved in the case, the dispute is arising out of interpretation of statute therefore, the demand is also not maintainable on the ground of time-bar.

Conclusion

The tribunal relied on the case of Chartered Logistics Limited vs. CCE in which it was held that “a person even if provides Goods Transportation service but if he does not issue Consignment Notes/LR, he cannot be brought under the ambit of GTA. The case of the appellant is on much better footing on the admitted fact that the appellant’s client FCPL is in fact the GTA who issued ‘Consignment Note’ in respect of the Transportation Service provided to M/s Reliance Industries Ltd. Therefore, appellant is not liable to pay Service Tax.”

Relying on another judgment the tribunal observed that in case transportation made by vehicle operator and no consignment note was issued, the service cannot be held as goods transport agency service liable to Service Tax.

In view of the decisions, the bench held that it is settled that as per facts involved in the case, applying the ratio of the judgments, the demand under GTA service is not sustainable.

Case Details

Case Name: Ashray Infrastructure V/S Commissioner of Central Excise & ST, Surat