Documentary Evidence to be Properly Verified for Service Tax Exemption provided to Small Consignments: CESTAT Remands issue to AA [Read Order]

The Customs, Excise and Service Tax AppellateTribunal (CESTAT), Chennai Bench, remanded an issue back to the Adjudicating Authority (AA) for proper verification of documentary evidence for service tax exemption provided to small consignments.

The appellant, M/s. Faiveley Transport Rail Technologies, is registered under Goods Transport Agency (GTA) and other services. A show cause notice (SCN) was issued against them alleging non-payment of service tax under reverse charge on transportation charges and improper classification of certain services as courier services without adequate evidence.

The Additional Commissioner confirmed the demand with interest and equal penalty, rejecting claims of courier classification, exemption for small consignments and tax already paid by service providers. On appeal, the Commissioner (Appeals) upheld the order, holding that the Appellant failed to substantiate its claims and sustained the demand, extended period and penalty.

The counsel for the appellant, before the CESTAT, submitted that the amounts paid to courier agencies cannot be classified under GTA services in absence of consignment notes, as they are sine qua non under Section 665(50b) of the Finance Act, 1994. It was further submitted that courier agencies are independently registered and have discharged service tax themselves, thus reverse charge liability cannot be fastened on the appellant.

The opposing counsel reiterated that the appellant is liable to pay service tax under Rule 2(1)(d)(v) of the Service Tax Rules, 1994. It had been contended that the appellant failed to produce adequate documentary evidence to establish that the services were in the nature of courier services and that the certificates produced were insufficient and inconclusive.

The CESTAT observed that appellant had provided sample copies of consignment notes, courier invoices and letters from courier agencies indicating discharge of service tax. However, it was recorded that a comprehensive verification was pending on these documents as both the Adjudicating Authority and the Commissioner (Appeals) had not undertaken it.

Since verification has not been done, reconsideration was required by the lower authorities. The bench of Ajayan T. V. (Judicial Member) and Vasa Seshagiri Rao (Technical Member) held that the Adjudicating Authority should examine all documentary evidence and pass a fresh order, allowing the appeal by way of remand.

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