No Service Tax Demandable on  Same Transaction both at hands of Service Recipient and Service Provider under different category of services: CESTAT [Read Order]

The Allahabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that service tax cannot be demanded on the same transaction both at the hands of the service recipient and service provider under different categories of services. 

Pranish Carriers LLP, the appellant assessee was engaged in providing the services of Goods Transport Agency (GTA) on which the due service tax was paid by the recipient of the service i.e.INOX Air Products Ltd. [INOX] and the assessee was providing the Lorry Chassis to INOX on which specialized tanks/equipment for carriage of gas was mounted by INOX and these carriers with the mounted items were used for transportation of the gases. 

The assessee appealed against the order passed by the Commissioner of Central Excise & Service Tax (Audit) for confirming the demand of Service Tax amounting to 4, 34,12,380/- (inclusive of Education Cess & S.&H. Education Cess) upon the party under proviso to Section 73(1) of the Finance Act 1994 and for the imposition of penalties. 

Gopal Mundhra, the counsel for the assessee contended that INOX had been paying the service tax on these services under the reverse charge mechanism as provided in law. Accordingly, once the service tax has been paid there cannot be a demand for payment of the service tax again. 

Sandeep Pandey, the counsel for the department contended that the supply of chassis by the assessee on which the specialized tanks/equipment were mounted by INOX was the provision of service under the category of Supply of Tangible Goods Services Section 65 (105) (zzzj) of the Finance Act and the assessee was required to discharge the service tax under the category which was not being done. 

The Bench observed that the same the transaction could not be levied to service tax both at the hands of the service recipient and the service provider under different categories of services and in this case if these transactions were to be taxed under the category of ‘Supply of Tangible Goods Services’, as had been held by the impugned order entire amount paid by the service recipient under the category of GTA services on the reverse charge basis should have been refunded and there was no scope of double transaction under the statute. 

The two-member bench comprising P K Choudhary (Judicial) and Sanjiv Srivastava (Technical) held that the service tax demand against the assessee was not legally sustainable and liable to be quashed. 

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