By TIOL News Service

MUMBAI, AUG 02, 2017: THIS is a Revenue appeal.

The facts of the case are that the respondent is engaged in the service of Transportation of their products from refinery to retail pump outlets/depots.

The transporter raised bill for transportation charges upon the respondent and service tax thereon was paid by the respondent on reverse charge basis. During transportation, the transporter paid toll taxes which are reimbursed separately by the respondent to the transport contractors on the basis of production of original toll receipts.

A SCN was issued demanding service tax on such reimbursement of toll taxes to the transporter on the ground that the same should be part and parcel of the gross value of the transportation charges.

While the original authority confirmed the demand, the Commissioner (Appeals) allowed the appeal of the respondent on the ground that the toll tax is a statutory levy enumerated at Sr. No. 59 of list-II (State list) in the Seventh Schedule of the Constitution of India and, therefore, toll as a form of tax cannot be included in the freight amount for the purpose of payment of service tax.

As mentioned, Revenue is before the CESTAT.

The AR submitted that though it may be a toll tax for the transporter but for the respondent it is part of the transportation charges paid by them to the transporter and, therefore, is chargeable to service tax.

The respondent supported the order of the Commissioner(A) and also placed reliance on the decisions in Intercontinental Consultants & Technocrats Pvt. Ltd - 2012-TIOL-966-HC-DEL-ST , Sangamitra Services - 2013-TIOL-606-HC-MAD-ST and Scott Wilson - 2012-TIOL-1253-CESTAT-DEL. Reference is also made to the CBEC Circular no. 152/3/2012-ST dated 22.02.2012 clarifying that service tax is not payable on toll charge paid by the road user. So also, in their own case, the Commissioner (Appeals) had dropped the demand vide Order-in-Appeal dated 11.04.2013 but which has not been appealed by the department.

The Bench considered the submissions and observed -

"5. … We find that the toll tax per se is not a service charge and the same is statutory levy enumerated at Sr. No. 59 of list-II (State list) in the seventh schedule of the Constitution of India. In the case of GTA service, respondent, though a service recipient by virtue of legal fiction, they are the deemed service provider. In such case, total amount of transportation is chargeable to service tax as a value of GTA. Therefore, the value on which the service tax on GTA is payable is deemed to be a value of the respondent. If this is so, then out of the total value a part of the value is toll tax. The service tax is not chargeable on any statutory levy whereas it is chargeable only on the service charge. The toll tax being a statutory levy cannot attract the service tax. Therefore, the order of the Commissioner (Appeals) is just and legal which does not require any interference…."

Upholding the impugned order, the Revenue appeal was dismissed.

(See 2017-TIOL-2727-CESTAT-MUM)