Taxability of ‘Transportation of Goods’ arises under the Place of Provision of Service Rules: CESTAT [Read Order]

The Mumbai Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) comprising Justice Dilip Gupta and Technical Member C J Mathew on appeal against the order passed by the Commissioner, has held that the taxability of ‘transportation of goods’ is to be applied under the Place of Provision of Service Rules,2012

The appellant ATA Freightline (India) Pvt Ltd engaged in integrated logistics and cargo with M/s ATA Freightline, New York an overseas entity providing end to end delivery for the period between July 2012 and March 2015. The carriage within India was sought to be taxed under the Place of Provision of Service Rules, 2012. The dispute was on the scheme of tax levy under section 66B of Finance Act, 1994 which imposed on all ‘services’, as defined in section 65B (44) of Finance Act, 1994 that was not excluded by section 66D of Finance Act, 1994 or not exempted by notification issued under section 93 of Finance Act, 1944.

 It was contended that the consideration received for composite engagement to deliver goods outside the country is linked with the export of goods and performed outside the ‘taxable territory’ envisaged under Finance Act, 1994 and claimed coverage under different rules of the Place of Provision of Service Rules, 2012. It was argued that this composite activity is disaggregated only within the meaning of ‘service’ in section 65B (44) of the Finance Act, 1994.

The Respondent submitted that the demand is restricted to the ‘consideration’ for ‘ex-works’ and ‘pre-shipment’ component of the activity as reflected in the books of accounts of the appellant and the ‘ex-works’ undertaken on goods in India are covered by rule 4 of Place of Provision of Service Rules, 2012.

The impugned order has confirmed tax liability of ₹2,25,42,181 under section 73 of Finance Act, 1994, along with applicable interest under section 75 of Finance Act, 1994, besides imposing penalty under sections 77 and 78 of Finance Act, 1994.

It was clear from the definition, that ‘service’ is not founded upon ‘consideration’ but is an activity carried out by a person for another for consideration and observed that the Place of Provision of Service Rules, 2012 is not a provision for charging of tax; it is limited to the determination of the location of the taxable entity under section 66 B of Finance Act, 1994.

The Tribunal held that the impugned order has not evaluated the taxability of transportation of goods and Rule 10 of Place of Provision of Service Rules, 2012 states non-taxability in the activity of the appellant and the impugned order was set aside. Shri Bharat K Raichandani appeared on behalf of the appellant and Shri Nitin Ranjan appeared for the respondent.

Support our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.