Transporters/Contractors Rendering Transport Services In Mines Cannot Be Said To Be GTA In Absence Of Consignment Note: CESTAT

The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that in the absence of a consignment note, transporters or contractors rendering transport services in mines cannot be said to be goods transport agencies (GTA).

The bench of P. Dinesha (Judicial Member) and M. Ajit Kumar (Technical Member) has observed that the essential requirement is the issuance of a consignment note in order to be covered under the definition of GTA, and in the absence of the same, the transporters and contractors rendering transport services in mines cannot be said to be GTA, and therefore, their service cannot be made amenable to the levy of service tax under the category of “transportation of goods by road” service.

During the course of the audit of accounts, the appellant/assessee appeared to have engaged the services of various contractors for the transportation of limestone from the mines to their factory, which was covered under the category of Goods Transport Agency (GTA) under Section 65(105)(zzp) of the Finance Act, 1994, read with Section 65(50b).

As per sub-rule 2(1)(d)(v) of the Service Tax Rules, 1994, the person liable for paying service tax on the transportation service provided by a GTA falls under any of the seven sub-clauses under the sub-rule.

The assessee furnished the details of the freight paid to various contractors for the transportation of limestone. According to the department, it had not been disclosed by the assessee in its S.T.-3 returns filed, and the same came to light only during the course of the audit of the assessee’s accounts.

The department noted that it amounted to suppression with the intent to evade payment of service tax. A show cause notice was issued proposing the service tax along with a demand for applicable interest and penalties.

The issue raised was whether the payment of freight attracted a service tax levy under the GTA.

The assessee contended that the transportation of limestone was undertaken by transport operators who were actually the owners of the trucks, with whom the appellant had directly entered into a contract for transportation. The transport operators were not covered by the definition of GTA. Hence, the appellant entertained a bona fide doubt that there was no liability to pay service tax on the freight that was paid directly to such transport operators or truck owners.

The tribunal quashed the service tax demand on the transportation service by the assessee.

Counsel For Appellant: R. Parthasarathy

Counsel For Respondent: N. Satyanarayanan

Case Title: M/s. The Ramco Cements Limited Versus Commissioner of Central Excise

Case No.: Service Tax Appeal No. 40585 of 2014

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