Consignor/Consignee Exempt category: CESTAT quashes Service Tax Demand on GTA [Read Order]

The Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) quashed service tax demand on GTA as the consignor or consignee comes under the exempt category.

In this case, the appellant, M/s. Bihar State Warehousing Corporation, Patna, is involved in providing the service falling within the storage and storage facility services. The appellant had been registered under the category of Goods Transport Agency ( GTA ) service.

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Upon reviewing the appellant's ST-3 forms for April 2003 to March 2008, it was found that they failed to pay the correct service tax for storage and warehousing services, as well as GTA services. Consequently, a Show Cause Notice ( SCN ) was issued, demanding a total of Rs. 6.6 crore in service tax.

Following the adjudication of the notice, the commissioner in the impugned order had used Section 78 of the Finance Act of 1994 to impose interest and a penalty of Rs. 1000, as well as a demand for service tax of Rs. 6,60,85,211, along with other charges.

Aggrieved by the above order, the appellant approached CESTAT for relief.

It was submitted by the appellant that according to Rule 2(1)(d)(v) of the Service Tax Rules, 1994,the liability for payment of service tax under the category of ‘GTA service’ is on the consignor or consignee of the goods, who pays the freight if the consignor or consignee are one among the seven categories listed therein.

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The bench observed that in this case, FCI, IFFCO, and similar entities are the consignors or consignees responsible for paying the freight. Since the consignees belong to one of the seven categories listed in Rule 2(1)(d)(v), and as per the appellant's submission, the agreement places the responsibility for paying the freight on the depositor or consignee.

The  CESTAT bench, comprising Ashok Jindal, Member ( Judicial ), and K. Anpazhakan, Member ( Technical ), held that the demand for service tax from the appellant under the category of ‘GTA service’ is not sustainable. 

To Read the full text of the Order CLICK HERE

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