Service Tax Liability Can't Be Levied On Freight And Cartage Expenses Under GTA Services: CESTAT

“The said amount/expenses/charges were not paid by the assessee directly to the transporter for transportation of any goods. Thus, the said activity cannot be covered under GTA Services, hence, no service tax liability can be levied on the aforesaid amount/expenses/charges under GTA services” stated the bench of Rachna Gupta (Judicial) and Hemambika R. Priya (Technical).

In this case, the assessee/respondent is registered for providing Commercial or Industrial Construction Service, Construction of Complex Service and Works Contract Service. It was alleged that assessee had not paid due service tax on taxable service relating to Construction of Commercial or Industrial building, civil structure and Works Contract.

A show cause notice was issued to the assessee demanding the service tax along with interests and penalties. The Adjudicating Authority has set aside the major amount of the said demand except the demand of service tax on 'Good Transport Agency Service'.

The appellant/department has challenged the order passed by the Adjudicating Authority before the Tribunal.

The assessee contended that the SCN is vague as the demand of service tax proposed under three different categories of services for one single activity is not sustainable. Further, it was contended by the assessee that construction services provided to IIM, DDA and CEAI were not for commercial concerns and thus are not classifiable under Commercial or Industrial Construction Service, Construction of Complex Service and Works Contract Service.

Whereas the department contended that the assessee received secured advance and advances from customer for execution of construction activities under Current Liabilities which were taxable amount for which no tax was paid by the assessee. Also, they incurred freight expenditure under Freight and Cartage Expenses which were taxable under Goods Transport Agency, but the tax was not paid.

The Tribunal pointed out that the services for the construction of IIM, DDA, CEAI were carried out for not-for-profit organization and constructed buildings were not primarily used for commerce or industry. Thus, these services are not covered under 'Commercial or Industrial Construction Service' or 'Works Contract Service'.

The Tribunal observed that freight and cartage expenses included costs for cartage, transportation, pumping, insurance, car policy, site expenses, and freight. The amount shown as a 'cartage' is related to payments made to the supplier of the goods which included the transportation cost.

“The aforesaid expenses also include expenses towards insurance and car policy and site expenses (payment made to cab supplier). The said amount/expenses/charges were not paid by the assessee directly to the transporter for transportation of any goods. Thus, the said activity cannot be covered under GTA Services, hence, no service tax liability can be levied on the aforesaid amount/expenses/charges under GTA services” stated the bench.

In view of the above, the Tribunal dismissed the appeal.

Counsel for Appellant/ Department: S.K. Meena

Counsel for Respondent/ Assessee: B.L. Narasimhan, Shri Ashutosh Choudhary

Case Title: Commissioner of Service Tax - Delhi III V. M/s. Globe Civil Projects Pvt. Ltd.

Case Number: Service Tax Appeal No. 54328 of 2015

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