CESTAT Directs Original Authority to Limit RCM Liability to Services Received from Registered Goods Transport Agencies [Read Order]
The Tribunal directed the original authority to re-compute the demand by limiting the same to services received by the Appellant from Goods Transport Agencies.
RCM - taxscan
RCM - taxscan
The Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has directed the adjudicating authority to re-compute the service tax liability under the Reverse Charge Mechanism (RCM), specifically limiting it to services received from registered Goods Transport Agencies (GTA).
Ganpati Mega Builders India Pvt. Ltd. (the appellant), is a registered provider of "Works Contract Services". The dispute arose following an investigation where the Revenue Department observed from the appellant's Balance Sheet that expenditures were incurred towards Freight & Cartage, Security Agency Services, and Legal Services.
The Department alleged that the appellant, being a Body Corporate, failed to pay Service Tax on these services under the Reverse Charge Mechanism (RCM).
Consequently, a Show Cause Notice was issued demanding Service Tax on these expenses, along with demands on the gross receipts from Works Contract Services provided to Mandi Parishad and Kanpur Development Authority (KDA). The adjudicating authority confirmed the demands.
The Counsel for the appellant contended that a portion of the "Freight & Cartage" expenses included payments made to individual truck owners regarding the demand on Goods Transport Agency (GTA) services
Relying on the decision in Aaditya Constructions, the appellant argued that individual truck owners who do not issue consignment notes do not fall under the definition of a "Goods Transport Agency," and thus, services rendered by them are not eligible for service tax.
The Bench comprising Sanjiv Srivastava (Technical Member) and Angad Prasad (Judicial Member) examined the ledger accounts and noted that the appellant had received services from various named transport agencies as well as individuals.
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The Bench expressed agreement with the decision in Aaditya Constructions, reiterating that unless a service provider issues a consignment note, they cannot be classified as a GTA. The Tribunal observed that the appellant had not provided a clear bifurcation of payments made to recognized GTAs versus individual truck owners.
The Tribunal held that in respect of the services received from the Good Transport Agency during the period in dispute the Appellant required to pay service tax under reverse charge mechanism.
The Bench set aside the demand regarding GTA services and remanded the matter back to the original authority. The authority was directed to re-compute the demand by strictly limiting it to services received from Goods Transport Agencies, thereby excluding payments to individual truck owners. The appeal of the appellant was allowed.
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