CESTAT Rejects Dual Taxation on Transportation: Service Already Taxed Under GTA Cannot Be Taxed Again as BAS [Read Order]

The Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) rejected the dual taxation imposed by the Revenue on the appellant by noting that the service already taxed under the Goods Transport Agency (GTA) cannot be taxed again as Business Auxiliary Service (BAS).

In this case, the assessee, M/s. Balajee Loha Pvt. Ltd., had appealed against the order passed by the Commissioner (Appeals), which upheld the order passed by the Assistant Commissioner. In the order in the original, the Assistant Commissioner had confirmed a demand of service tax of Rs. 2,21,045 and Rs. 1,75,155 on the appellant under the proviso to section 73(1) of the Finance Act, 1994, along with interest and penalties.

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The appellant is registered with the service tax department and offers taxable services such as insurance, transportation, and weigh bridge. The department found that the appellant had earned ‘other income’ from delayed payment charges, which they considered taxable as a declared service under Section 66E(e) of the Finance Act from July 1, 2012.

A show cause notice (SCN) dated 30-8-2016 was issued to the assessee by invoking extended period of limitation under the proviso to section 73(1) of the Finance Act, demanding service tax with interest and proposing the imposition of penalties.

The appellant charged customers for delivering goods to their premises. The department wants to treat this as a taxable service under BAS up to 1.7.2012 and as a service from 1.7.2012 onwards.

The appellant submitted that it had not transported the goods by itself but hired a Goods Transport Agency (GTA) to do the transportation. It was further submitted that no service tax can again be charged on forward charge basis on the transportation charges treating it as business auxiliary service (BAS) as on the amounts charged by the GTA, the appellant had paid service tax on GTA services on reverse charge basis.

The department’s counsel strongly relied on the impugned order.

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The bench observed that the same activity of transportation cannot be treated as GTA service to charge service tax under reverse charge and also as BAS to charge service tax on forward charge basis.

The tribunal noted that as the appellant had paid service tax under reverse charge under GTA, no service tax on transportation can be charged, treating it as BAS (up to 1.7.2012) and as service (after 1.7.2012).

The tribunal set aside the impugned order.

Delhi CESTAT, comprising Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member), allowed the assessee’s appeal.

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