Demand for Service Tax by simply relying on Income Tax Returns & Profit and Loss Accounts is not sustainable: CESTAT deletes Penalty [Read Order]

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Allahabad bench has held that the demand for service tax by simply relying on income tax returns & profit and loss accounts is not sustainable.

The appellants are engaged in the transportation of goods from various siding to Nepal. The department observed that the appellant had rendered the taxable services under the categories ‘Goods Transport Agency Service’, ‘Business Auxiliary Service’, ‘Manpower Recruitment Service or Supply Service’ etc and that the appellant had not discharged the applicable service tax.

On completion of the enquiry, a show cause notice was issued to the appellant confirming recovery service tax of Rs.1,42,82,025/- along with penalty under section 77 and section 78 of Finance Act, 1994.

It was observed that no contract or agreements have been expected to show that the appellant had undertaken any responsibility to transport the goods or it had just provided the trucks as owners of the trucks.

The Tribunal observed that taxability as a goods transport agency arises when the person provides services in ‘relation tothe transport of goods by road and issues consignment notes. In the instant case, the appellant is not an agent who books for transportation of goods by road by a goods carriage. It is the one who arranges for the transportation of goods through own trucks/trucks taken from the market.

On perusal of copies of delivery challan, it can be seen that they contain the signature of the receiver on behalf of the customer, which implies that the Nepal parties receive ‘the goods in good condition and then these goods are transported vide the Truck carrying the Number as quoted in the Challan.

Mr Justice Dilip Gupta, president Mr P Anjani Kumar, member (technical) observed that service tax is on goods transport agencies and not on individual transport vehicle/ truck owners/operator who provides transportation of goods by road through owned trucks/outside trucks, as their services is in the negative list

The Tribunal set aside the demand is not sustained and the appeal was allowed with consequential relief.  Shri Dharmendra Srivastava appeared on behalf of the Appellant and Shri B. K. Jain appeared for the Respondent.

To Read the full text of the Order CLICK HERE

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