Tobacco Leaves Threshing Not Taxable under BAS: CESTAT sets aside Service Tax Demand [Read Order]
GTA liability arises only when a consignment note (or similar statutory transport document) is issued, and in the absence of such evidence, the service cannot be classified under GTA
The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has ruled that service tax cannot be levied on threshing charges received for tobacco leaves, holding that such activity is not taxable under the category of Business Auxiliary Service (BAS). It also set aside the GTA liability.
In the matter of M/s Chebrolu Agros Pvt. Ltd, the appellate tribunal set aside the service tax demand raised for the period April 2010 to March 2011.
As per the Department, the assessee had undertaken threshing of tobacco leaves and received threshing charges, on which the Department proposed to levy service tax under BAS, along with a small demand under Goods Transport Agency (GTA) service relating to freight paid to truck operators.
During the hearing, no one appeared on behalf of the appellant.
The Tribunal noted that the core question was whether threshing charges could be taxed under BAS, and found that the issue was no longer res integra, since in the assessee’s own case earlier, the Tribunal had already taken a view that such threshing activity is not liable to service tax under BAS.
Additionally, the matter involved a demand under GTA service, the bench of A K Jyotishi (Technical Member) and Angad Prasad (Judicial Member ) observed that the impugned order did not contain a proper reasoning to sustain the GTA demand.
The appellate tribunal said that GTA liability arises only when a consignment note (or similar statutory transport document) is issued, and in the absence of such evidence, the service cannot be classified under GTA.
Since the record did not show any such consignment note or equivalent document, the Tribunal held that the GTA demand too could not survive.
Accordingly, the Tribunal set aside the entire service tax demand under both BAS and GTA categories and allowed the appeal in favour of the assessee.
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