The power to levy service tax is derived by the Central Government vide residual entry No. 97 of Schedule VII of the Constitution of India. Service Tax is levied, collected and administered under Chapter V of the Finance Act, 1994. The levy of Service Tax on Road Transportation Service has always remained subject matter of uncertainty and litigation. Any person or business that provides transportation services of goods by road and issues a consignment note falls under the GTA.
Section 65B(26) of the Finance Act, 1994, defines that “Goods Transport Agency ( GTA )means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called”.
Typically, service tax on GTA services was charged at 15% ( including Swachh Bharat Cess and Krishi Kalyan Cess ) before the implementation of GST. Post-GST, this has been subsumed into the Goods and Services Tax ( GST ). Post-July 1, 2017, the service tax was replaced by GST. Under GST, transportation services by a GTA are still taxed but under the GST framework with specific provisions for ITC and RCM.
Under the Reverse Charge Mechanism ( RCM ), the liability to pay the service tax rests with the recipient of the GTA services rather than the provider.
Rule 10 of Place of Provision of Services Rules, 2012, states that “Place of provision of a service of transportation of goods is the place of destination of goods, except in the case of services provided by a GTA in respect of transportation of goods by road, in which case the place of provision is the location of the person liable to pay tax ( as determined in terms of Rule 2(1)(d) of Service Tax Rules, 1994 ).”
Exemptions:
In a recent case, the Ahmedabad bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) set aside the demand for service tax since there was no Goods Transport Agency( GTA ) service in absence of consignment notes. The two-member Coram comprising Mr Ramesh Nair, Member (Judicial) and Raju, Member (Technical) observed that since no consignment notes were issued to the transporter no GTA service has been provided. The CESTAT viewed that the service of goods transport agent is not supplied and set aside the demand.
The Punjab Authority For Advance Ruling Goods And Service Tax, has recently clarified that cotton seed ( Banaula ) is not eligible for exemption from the payment of GST on GTA services. The GST chargeable is 5% ( 2.5 % CGST and 2.5 % SGST ) on GTA services availed by the applicant for transporting cotton seeds ( Banaula ), provided that credit of input tax charged on goods and services used in supplying the service has not been taken, else at 6%, under Sr. No. 9 of the Notification No. 11/2017 – Central Tax ( Rate ) dated 28.06.2017.”
The Hyderabad Bench of the Central Excise and Service Tax Appellate Tribunal ( CESTAT ) in the case of Oren Hydrocarbons Pvt Ltd v Commissioner of Customs held that where the conditions for availing a refund of service tax on GTA services were not met, the benefit on the said service cannot be obtained. Further, the exemption is available by way of refund of tax paid on specified services used for export of goods. The aforementioned condition does not infer that the service tax shall not be paid. In the present case, GTA services were availed for transporting goods from their Kodir unit to Chennai. Thereafter, the Chennai unit, in turn, exported the goods. While transportation may be in relation to the export of goods, there is no sufficient evidence to show that this transportation is actually for the export of goods.
The Ahmedabad bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) quashed the demand of service tax for the commission availed by the assessee on the goods transport agency service on the ground of the limitation. J.B Exports, the appellant assessee is engaged in the export of goods to foreign buyers and while raising the invoices in the sale invoice the assessee had deducted 10%/12.5% as commission, and after deduction of the said commission the amount was realized against the export proceeds. Also observed that the revenue was raised the demand by invoking the extended period. The two-member bench comprising Ramesh Nair ( Judicial ) and Raju ( Technical ) quashed the demand for service tax on the goods transport agency service while allowing the appeal filed by the assessee.
The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Delhi bench has held that the GTA services provided to the registered factories shall be subject to service tax under the reverse charge mechanism ( RCM ). “A perusal of the same will lead to inevitable conclusion that the proprietary concern to whom GTA services were provided by the appellant, were authorized dealers of Piggio Auto and were registered as factories therefore in view of Section 68(2) ibid read with Notification ( supra ) those they are liable to pay service tax under reverse charge mechanism. Therefore the demand for the period April, 2016 to June, 2017 is also liable to be set aside. Although the appellant has also raised the issue of threshold exemption under notification no.33/2012-ST dated 20.62012 but as I have already held that since those proprietary concerned have been registered as factories, they are liable to pay service tax under reverse charge mechanism, therefore I am not deciding the issue of threshold exemption,” the Tribunal said.
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) ruled that service tax not leviable in absence of consignment note and that services cannot be considered as GTA services. “In the present case, I find that it is an undisputed position that the appellant had not issued any consignment notes by whatever name and hence in view of the law laid down by the series of decisions, no service tax liability can be imposed. I, therefore, hold that the demand proposed in the show cause notice for recovery of service tax of Rs. 1,69,003/- along with interest and penalty is liable to be dropped and the impugned order needs to be set aside” the Bench added.
The Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) in Rohan Motors Ltd v. CCE, Meerut, held that the department cannot classify a service as Goods Transport Agency ( GTA ) and demand tax from such service in the absence of Consignment notes. The Tribunal allowed the above contention and noted that the appellant has paid the freight expenses in connection with transportation of Cars to their customers. “However, they have not issued any consignment notes which are necessary to identify the appellant as a goods transport agency. As per the views expressed by the Tribunal in the case of South Eastern Coal Fields Ltd. (supra), in the absence of consignment notes, the activity of the appellant cannot be classified under GTA service. Consequently, we set aside the demand under GTA service,” the bench said.
The Chennai bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) in a recent case dismissed the appeal due to the failure by the appellant to demarcate the service period of Refund claimed on Service tax paid mistakenly on Goods and Transport Service ( GTA ) of the cylinder. A two-member bench comprising Ms Sulekha Beevi C.S., Member (Judicial) and Shri M. Ajit Kumar, Member ( Technical ) observed that the period involved in the present appeal overlaps with the period for which the demand has been confirmed. While dismissing the appeal, the CESTAT held that the appellant is not eligible for a refund and upheld the impugned order.
In a recent decision, the CESTAT, delhi bench ruled that CENVAT Credit on Service Tax paid towards GTA services availed for transportation of cement from factory gate to their customers premises. The Tribunal noted that the cement is supplied at the premises of the customers and the freight is arranged and paid by the appellants. It was further pointed out that the Tribunal, in the own case of the assessee has allowed the same by holding that when sales by the assessee were on FOR they legitimately availed cenvat credit on the service tax paid on the freight charges, borne for its FOR sales. Accordingly, the impugned order was quashed.
The Authority for Advance Rulings (AAR), Gujarat has held that input tax credit (ITC) can be claimed by the assessee on provision of the GTA services provided despite refrigerated vehicles travelling empty during the return journey. Regarding the claim of input tax credit, the AAR bench observed that “ITC is admissible to Vadilal, on GST paid on GTA service supplied to it, despite the fact that refrigerated vehicles travelled empty during the return journey as Vadilal has paid an agreed freight to the GTA for its service and this agreed freight was inclusive of both onward and return journey (round trip).”
The Delhi bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) set aside the service demand and held that absence of consignment note services can’t be considered as GTA service. In instant case, Assessee is a company engaged in the business of ice cream production clearing their goods through the specialised refrigerated van. The company entered into an agreement with the owners of the van for hiring their vehicle on hire charges at a fixed rate on kilometre basis. The bench also called the attention of both the parties to the judgment of the Tribunal in South Eastern Coalfields Ltd. vs. CCE and hold that the demands of service tax under the category of “Goods Transport Agency does not sustain since the absence of consignment note services cannot be considered as GTA Service.
The Delhi Bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that transport service cannot be considered as “Goods Transport Agency” ( GTA ) service in the absence of a consignment note. While allowing the appeal, Ms Binu Tamta, Member ( Judicial ) set aside on the ground that the transport services were rendered by the individual truck or transport operators and therefore no consignment note was issued and as a result, the same would not fall within the scope of the definition of “Goods Transport Agency” as given in section 65(50 b) of the Finance Act, 1994.
The High Court of Jharkhand has refrained to decide on the leviablity of GST for GTA Services during the investigation. GTS Coal Sales, the petitioners prayed for a direction to refund the involuntarily deposited amount of Rs. 60 lac in W.P.(T) No. 1539 of 2021 and Rs. 47,64,900/- in W.P.(T) No. 14 of 2021 without there being any demand and/or adjudication proceeding. The Court held that “if after investigation and subsequent proceedings, an adjudication order is passed against the respective petitioners and they are held liable to pay the tax @ 18%; then both the petitioners would be at liberty to raise their claim of the differential amount from respective Coal- companies in an appropriate proceeding before an appropriate forum which shall be decided as per law and the agreement/work orders between the parties and verification of documents.”
The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal has ruled that the credit of GTA service can be allowed from the place of removal to to the place of removal. It was observed that Rule 7 of CCR provided the mechanism to distribute the credit and the condition for proportionate distribution was insertedafter the amendment made in 2016. Further observed that the impugned order denying credit based onnon-registration of Head Office as ISD was not sustainable. Shri P K Choudhary, JM and Shri P Anjani Kumar, AM observed the impugned orders are not sustainable on merits and limitations as well. The appeals are allowed with consequential relief to the Appellants bythe law. Shri Rajesh Chhibber appeared for the Appellant and Shri J Chattopadhyay & A Roy appeared for the Respondent.
The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) ruled that no service tax is leviable on Goods Transport Agency ( GTA ) services availed outside to special economic ( SEZ ) zone. A Two-Member Bench comprising Vasa Seshagiri Rao, Technical Member and CS Sulekha Beevi, Judicial Member observed that “After considering the facts and evidences placed before us and following the ratio laid in the decisions, we are of considered opinion that the demand cannot sustain and requires to be set aside. Ordered accordingly”.
The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), while quashing service tax demand made by the department against ONGC, held that the effluents cannot be treated as ‘goods’ for the purpose of imposing service tax under the head ‘Goods Transport Agency’ under the Finance Act, 1994. The assessee claimed that the said activity would not attract service tax liability under GTA service since the same cannot be treated as ‘goods’. Referring a catena of judicial decisions, the tribunal bench held that the transportation of effluents cannot be treated as transportation of ‘goods‛ and hence there cannot be any service tax liability under ‘Goods Transport Agency’ as defined in Section 65 (150b) of the Finance Act, 1994. “This being so, the tax liability of Rs.11,24,258/- and the penalty imposed thereof cannot sustain and are set aside,” the bench said.
In a major relief to MRF Ltd, the Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that cenvat credit shall be allowed for the payment of service tax on GTA services availed for transportation of goods from the factory to the customer’s premises. Deleting the order and granting relief to the company, the Tribunal held that “the said issue has been analyzed by the Division Bench of the Tribunal at Ahmedabad in the case of Ultratech Cement Ltd. Vs CCE – 2019 (2) TMI 1487. It is also submitted by the Ld. Counsel that said decision has been upheld by the High Court of Gujarat vide R/Tax Appeal Nos.691 of 2019, 698 of 2019 and 690 of 2019 all dated 23.01.2020. Following the above decisions, I am of the view that the demand cannot sustain. The impugned orders are set aside.”
The Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) in M/s Rathi Tiles Pvt. Limited v. CCE, Jodhpur held that the liability for payment of service tax under GTA cannot be sustained against the appellant in the absence of consignment notes. The division bench clarified that the debit notes issued by the individual truck owners cannot be treated as consignment notes for imposing tax. Appellant is manufacturer of marble products, gets slabs from mines and get the transported through individual truck owners to their factory. The payment of freight is made by the appellant to such individual truck owners. “The issue which stands settled in the various case laws cited by the appellant is that as long as no consignment note is issued in terms of Rule 4B of the Service Tax Rules, 1994 by the transporter, the service tax liability under the category of GTA service does not arise. There is no dispute in the facts of the present case that the individual truck owners do not issue any consignment notes. The debit notes issued by the appellant indicating the freight payable cannot be considered as a consignment note as per Rule 4B ibid.
The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Delhi bench has held that the service tax cannot be levied on ‘Goods transport agency’ services if consignment notes are not issued. The bench, while granting relief to the appellants, further relied on the decision of the Tribunal in Bhoramdeo Sahakari Shakhar Utpadam Karkhana vs. Commissioner of Customs, Central Excise & Service Tax, Raipur, wherein it has been held that service tax can be levied only if consignment notes are issued. “Thus, service tax liability could not have been fastened on the appellant under the reserve charge mechanism,” the bench concluded.
In a recent judgement, the Chennai bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) remanded matter for re compute service tax payable under Good Transport Agency Service ( GTA ) Service, as the service undertaken for carriage of food grains and pulses are exempted by notification. A two member bench of Mr P Dinesha, Member (Judicial) and Mr Vasa Seshagiri Rao, Member ( Technical ) directed the Lower Adjudicating Authority to re-compute the tax payable giving the benefit of abatement under Notification No. 32/2004-ST dated 03.12.2004 and exemption benefit under Notification No. 34/2004-ST dated 03.12.2004. GTA Service undertaken for carriage of food grains and pulses is also exempted from payment of Service Tax w.e.f. 29.02.2010 under Notification No. 33/2004-ST dated 03.12.2004
The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) granted relief to the TamilNadu Electricity Board by quashing the service tax demand on the Goods Transport Agent ( GTA ) services on the ground of limitation. The Bench observed that the exemption under Notification No. 45/2010-ST dated 20.07.2010 and Notification No. 11/2010-ST was an omnibus exemption as the Notification does not exempt any particular category of taxable service but exempts ‘all taxable services relating to transmission of electricity and distribution of electricity’. The two-member bench comprising P Dinesh ( Judicial ) and Vasa Seshagiri Rao (Technical) quashed the service tax demand while allowing the appeal filed by the assessee.
The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) held that the Goods Transport Agent ( GTA ) services were availed for the transport of Line materials and Tower parts which are related to the transmission of electricity are eligible for the benefit of the exemption Notification. The two-member bench comprising P Dinesha (Judicial) and Vasa Seshagiri Rao ( Technical ) held that the GTA Services were availed for transport of Line materials and Tower parts which are related to transmission of electricity are eligible for the benefit of the exemption Notification No. 11/2010-Service Tax.
While hearing the case of Ultra Tech Cement Ltd, the Supreme Court held that cenvat credit on Goods Transport Agency- GTA service, availed for transport of goods from the place of removal to buyer’s premises is not admissible from 01.04.2008. “Secondly, if such a circular is made applicable even in respect of post-amendment cases, it would be violative of Rule 2(l) of Rules, 2004 and such a situation cannot be countenanced,” the bench said.
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