The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata Bench set aside demand of Rs 34,556 on the ground that Transport charges not taxable service as not provided by goods transport agency.
The Appellant, M/s. Beterman Engineering Private Limited is engaged in the manufacture of Pollution Control Equipment and other fabricated structure of iron and steel. The Appellant purchased goods from M/s. Jindal Steel and Power Limited, M/s.M.Rajkrishna & Company, M/s. Shree Ganesh Trading Company and M/s. Nizone Tubes. During Audit for the period 2008-09, it was observed by the audit party that it had paid Rs.4,31,426/- as freight charges and had paid Service Tax on an amount of Rs.1,51,847/- only, and it was alleged that they had not paid the Service Tax on the balance transport charges amounting to Rs,2,79,579/- involving Service Tax amounting to Rs.34,556/-.
A Show Cause Notice was issued to demand and recover Rs.34,556/- along with applicable interest and for imposition of penalty under Section 76, 77 and 78. It is the case of the Appellant that in respect of invoices of M/s. Jindal Steel and Power Limited, it has been categorically mentioned in the invoice “to be billed Raigarh”. So, the freight was paid by the consignor of the goods. Regarding delivery charges included in the invoice billed by M/s. M. Rajkrishna and Company, M/s. Shree Ganesh Trading Company and M/s Nizone Tubes, the goods were transported to the Appellant’s factory by transporters arranged by the consignors and the Appellant has not made any payment directly to any transporter for the transportation of goods from the consignor’s premises to their factory.
The Appellant further submitted that initially the amount of freight charges has been borne by the supplier of the goods and Service Tax liability, if any, will be borne by the supplier of the goods. The Adjudicating authority however confirmed the demand as proposed in the Show Cause Notice and imposed penalty of Rs.3,224/- under Section 76, penalty of Rs.5,000/- under Section 77 and penalty of Rs.34,556/- under Section 78 of the Finance Act, 1994. On Appeal, the Commissioner (Appeals) rejected the Appeal. Hence the present Appeal has been preferred before the Tribunal.
The Bench consisting of P K Chaudhary, Judicial Member held that “I find that the Appellant has all along taken the view that the service is not taxable service as it was not provided by the goods transport agency, but by goods transport operator and/or individual truck owners namely an individual either owning or operating. In view of the above discussion, the impugned orders are set aside.”
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