By TIOL News Service

MUMBAI, APRIL 13, 2018: THE Appellant is engaged in manufacture of Ice Cream falling under chapter 21. They are clearing their goods to distributors/dealers all over the country by specialized refrigerated Vans.

They entered into agreement with the owners of such vans to hire their Vehicles on hire charges at a fixed rate on kilometer basis. The Vehicles were under the disposal of the Appellant and were transporting goods as per Appellant's instructions.

The demands under service tax was made on the ground that the Appellant had paid transportation charges to such vehicle owners but did not discharge the service tax liability under the category of "Goods Transport Agency".

The demands were confirmed and so the appellant is before the CESTAT.

It is submitted that no consignment note was prepared and the bills were raised by the Vehicle owners on the basis of monthly kilometers travelled by the Van; that in order to categorize the above incidence as of Goods Transport Agency, it has to be shown that a consignment note was issued by the service provider whereas in the present case no consignment note was issued which is the requirement for classification of service.

Reliance is placed on the following decisions - Bhima SSK Ltd. - 2017-TIOL-2693-CESTAT-MUM, South Eastern Coalfields Ltd. - 2016-TIOL-2773-CESTAT-DEL & Ultratech Cement Ltd. - 2017-TIOL-2714-CESTAT-MUM.

Furthermore, since the refrigerated trucks were given on hire on monthly basis by individual owners, therefore, such activity cannot be termed as of Goods Transport Agency but of "transfer of right to use" and is to be treated as deemed sale within the clause (29A) of Article 366 of the Constitution. [Gimmco Ltd. - 2017-TIOL-485-CESTAT-MUM and G.S. Lamba & Sons 2012-TIOL-49-HC-AP-CT relied upon.]

The AR supported the order of the lower authorities. It is also pleaded that since the ground of non-issue of consignment note was not part of the appeal memorandum, this additional ground can be raised only by a miscellaneous application and not otherwise.

The Bench considered the submissions and observed that since the vehicles are hired on monthly basis and the charges are not based upon destination but on kms basis, it cannot be said that the services involved are of Goods Transport Agency; and it was obvious that no consignment note is issued as the service is not of consignment to be taken to any particular destination and, therefore, the services would not fall under the category of Goods Transport Agency.

Agreeing with the submission made by the appellant that the issue is squarely covered by the judgment of the Tribunal in the case of SOUTH EASTERN COALFIELDS LTD. - 2016-TIOL-2773-CESTAT-DEL, the CESTAT extensively extracted from the said decision and concluded that the demands of service tax under the category of "Goods Transport Agency" does not sustain.

The impugned orders were set aside and the appeals were allowed with consequential relief.

(See 2018-TIOL-1180-CESTAT-MUM)