ST - Liability under GTA -HC relied on a judgment which involved an entirely different issue - Order set aside and matter remitted: SC
By TIOL News Service
NEW DELHI, FEB 06, 2018: THE appellants are engaged in the business of exporting iron ore and registered themselves with the service tax authorities as a recipient of GTA service. The Commissioner initiated action for confirmation of service tax demand of Rs. 1.56 crores on the ground that the appellants had not discharged their service tax liabilities for procurement of services for transportation of goods.
Aggrieved, the assessee filed an appeal before the CESTAT.
The CESTAT - 2010-TIOL-122-CESTAT-BANG while setting aside the order observed:
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"……the claim of the appellants that the impugned services were not exigible to service tax is amply supported by the following extract of the Budget Speech of the Finance Minister, made while introducing the Finance Bill, 2004.
"149. 58 services have been brought under the net so far. I propose to add some more this year. These are business exhibition services; airport services; services provided by transport booking agents; transport of goods by air; survey and exploration services; opinion poll services; intellectual property services other than copy right; brokers of forward contracts; pandal and shamiana contractors; outdoor caterers; independent TV/radio programme producers; construction services in respect of commercial or industrial constructions; and life insurance services to the extent of the risk premium. I may clarify that there is no intention to levy service tax on truck owners or truck operators ……………………"."
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The High Court dismissed the Revenue appeal .
Revenue is, therefore, before the Supreme Court.
The apex court noted that following were the two substantial questions of law on which the appeal was admitted -
I) Whether the order of the CESTAT, based solely on the speech of the Hon'ble Finance Minister made while introducing the Finance Bill, 2004 and not as per the statutory provisions of law was right in holding that the respondents were not liable to pay Service Tax under the category of "Goods Transport Agency"?
ii) Whether the order of the CESTAT was right in holding that the respondents were not liable to Service Tax under the category of "Goods Transport Agency", contrary to the statutory provisions of law i.e., Section 65(105) (zzp), Section 65 (50b), Rule 2(1)(d)(v) of the Service Tax Rules, 1994 and Notification No. 35/2004 ST dated 03.12.2004 w.e.f. 01.01.2005 and thereby setting aside the order in Original dated 21.08.2008?"
The apex court further observed that based on the definitions contained in Section 65(105) (zzp) and Section 65 (50b) of the Finance Act, 1994 as well as Rule 2(1)(d)(v) of the Service Tax Rules, 1994, the High Court was required to decide as to whether the services provided by the respondent(s)/assessee(s) herein are covered by the aforesaid definitions. However, the High Court had not discussed the aforesaid issue but dismissed the appeal of the Revenue by observing that the aforesaid questions of law are covered by the decision of the Division Bench of the High Court dated 23.03.2011 in C.E.A No. 121 of 2009 and other connected matters titled as Commissioner of Central Excise & S.T., LTU, Bangalore versus ABB Ltd. - 2011-TIOL-395-HC-KAR-ST.
The Supreme Court observed that in the said judgment the issue pertained to CENVAT credit of service tax in respect of input service and whether output transportation from the place of removal was input service of which CENVAT credit was admissible.
Inasmuch as since the issue in ABB Ltd. case was entirely different and the High Court had wrongly dismissed the appeal of the Revenue/appellant by relying upon the said judgment, the Revenue appeal was allowed and the impugned judgment of the High Court was set aside.
Thematter was remitted to the High Court for de novo consideration.
(See 2018-TIOL-46-SC-ST)
