The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that no service tax can be levied when no consignment note has been issued to service recipient, thereby granting relief to M/s. Vedanta Limited, the appellant.
It appeared to the Department that the appellant failed to pay the Service Tax on transportation charges of the export cargo for the period from August 2006 to December 2010. Show Cause Notice was issued proposing to demand the Service Tax along with interest and for imposing penalties.
After due process of law, the original authority confirmed the demand along with interest and imposed penalty. On appeal, the Commissioner (Appeals) upheld the same. Hence, the present appeal.
The counsel Akshit Malhotra appeared and argued for the appellant. The main argument put forward by the appellant was that the Custom House Agents engaged by them were also truck owners/truck operators and that the latter had not raised any consignment note for the said service. The appellants are not liable pay Service Tax as without issuance of consignment note by a GTA, the activity of transportation by road will not fall within the ambit of GTA services.
The counsel further submitted that in the Show Cause Notice, the Department has alleged that the appellant is liable to pay Service Tax under reverse charge mechanism under the category of goods transport agency services. However, they have not produced any evidence to show that the appellant has been issued a consignment note by a goods transport agency. It was decided in various cases that it is the burden of the Department to adduce evidence to demand the Service Tax.
The decision in the case of Bharat Swabhiman (Nyas) Vs. Commissioner of Customs was relied by the counsel to argue that when consignment note is not issued the activity cannot be said to be covered under goods transport agency services and the demand of Service Tax cannot sustain.
A Two-Member Bench comprising Vasa Seshagiri Rao, Technical Member and CS Sulekha Beevi , Judicial Member observed that “The Service Tax Rules under Section 2(1)(b), provides that the recipient of service is liable to pay the Service Tax. In the present case, the demand has been raised upon the appellant alleging that they are the recipient of services of goods transport agency services provided by the CHA. Admittedly, the appellant has not been issued a consignment note.”
The Bench relied on the decision in the case of JWC Logistics Pvt. Ltd, where it was held that unless a consignment note is issued, the ingredients of goods transport agency services are not satisfied and therefore the demand under the said category cannot survive.
“After appreciating the facts and following the above decisions, we hold that the demand of Service Tax cannot be sustained” the Bench noted.
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