Nandganj Sihori Sugar Co. Ltd. C. C. E., Lucknow Bajpur Co-operative Sugar Factory Ltd. C. C. E., Meerut II

Transcription

1 [2015] 79 VST 330 (CESTAT) [CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL] (NEW DELHI BENCH) Nandganj Sihori Sugar Co. Ltd. V. C. C. E., Lucknow Bajpur Co-operative Sugar Factory Ltd. V. C. C. E., Meerut II RAGHURAM G. J. (PRESIDENT) AND RAKESH KUMAR (TECHNICAL MEMBER) January 13,2014 HF Assessee, including dealer (Registered or Unregistered) SERVICE TAX GOODS TRANSPORT AGENCY SERVICE TRANSPORTER GOODS TRANSPORT AGENCY TO ISSUE CONSIGNMENT NOTES OR GRS OR CHALLANS OR ANY DOCUMENTS CONTAINING PARTICULARS AS PRESCRIBED IN EXPLANATION TO RULE 4B OF SERVICE TAX RULES, 1994 TRANSPORTATION OF SUGARCANE BY INDIVIDUAL TRUCK OWNERS FROM CANE COLLECTION CENTERS TO SUGAR MILLS BY ISSUING FORTNIGHTLY BILLS NOT A SERVICE OF GOODS TRANSPORT AGENCY NO LIABILITY ON SUGAR MILLS ON PAYMENTS MADE TO TRANSPORTERS SERVICE TAX RULES, 1994, RR.2(1)(D)(V), 4B FINANCE ACT (32 OF 1994), S.65(50A), (50B), (105)(ZZP). The appellants-sugar mills set up cane collection centers and arranged the transportation from there to the sugar mills, the charges for the same at an average rate being deducted from the price for the sugarcane paid to the farmers. The transporters engaged by the appellants were individual truck owners who charged for transport by presenting fortnightly bill and as such no consignment notes were issued. The Department took the view that the appellants had received the service of goods transport agency taxable under section 65(105)(zzp) of the Finance Act, 1994 and demanded tax from the appellants as service recipient under rule 2(1)(d)(v) of the Service Tax Rules, 1994 read with Notification No. 35/2004(ST) dated December 3, 2004, on the payments made by them to transporters. Accordingly show-cause notices were issued to them for demand of service tax along with interest thereon and also for imposition of penalties. The adjudicating authorities confirmed the tax demand as made in the show-cause notices along with interest and penalties. The appellants filed appeals. The Department also filed an appeal against that part of the order of the adjudicating authority in the case of an appellant extending the benefit of abatement under Notification No. 32/2004-ST: Held, allowing the appeals, filed by the appellants and dismissing the appeal filed by the Department that under rule 4B of the Service Tax Rules, 1994, any goods transport agency which provided service in relation to transport of goods by road in a goods carriage would issue a consignment note to the customer. A goods transport agency in terms of its definition under section 65(50b) provided service in relation to transportation of goods under a consignment note which should have the particulars as prescribed in Explanation to rule 4B. It was an admitted fact that no consignment note was issued by the transporter to the appellants. The fortnightly bills issued by the transporters could not be treated as consignment notes, as a consignment note issued by goods transport agency represented its liability to transport the consignment handed over to it to the destination and deliver the same to the consignee.the transportation of goods by individual truck owners without issue of consignment note, GR s and billties, etc., as prescribed in rule 4B of the Service Tax Rules, would be simple transportation and not the service of goods transport agency which involved not only

2 undertaking the transportation of the goods handed over to it but also undertaking delivery of the goods to the consignee and also temporary storage of the goods till delivery. When the transports did not issue consignment notes or GRs or challans or any documents containing the particular as prescribed in Explanation to rule 4B of the Service Tax Rules, 1994, the transporters could not be called goods transport agency and, hence, in these cases, the service of transportation of sugarcane provided by the transporters would not be covered by section 65(105)(zzp). Therefore there would be no service tax liability on the appellants as they had not received the service from a goods transport agency. Final Order Nos , Final Order Nos , Final Order Nos /2014-CU(DB), Service Tax Appeal Nos. ST/556, Service Tax Appeal Nos. ST/573/2008 CU(DB), Service Tax Appeal Nos. ST/134/2009 CU(DB) decided on January 13,2014 Bipin Garg, Advocate, for the assessee. R. Puri, Departmental Representative, for the Department. Cases referred to : ORDER RAKESH KUMAR (Technical Member). The facts giving rise to theseappeals are, in brief, as under: M/s. Nandganj Sihori Sugar Co. Ltd. (hereinafter referred to as "M/s. Nandganj") and M/s. Bajpur Co-operative Sugar Factory Ltd. (hereinafter referred to as "M/s. Bajpur") are engaged in manufacture and sale of sugar and molasses, chargeable to Central excise duty. Both these sugar mills during the period of dispute were required to pay a price fixed by the Government of Uttar Pradesh to the farmers for purchase of sugarcane and the price was for delivery of sugarcane by the farmers at the sugar mills. In both the cases the appellant's sugar mills had set up cane collection centers where the farmers could deliver the sugarcane by making their own arrangement. The transportation of sugarcane from various cane centers to the sugar mills, was arranged by the appellants by arranging the transport and the charges for the same at an average rate were deducted from the price for the sugarcane paid to the farmers. The transporters engaged by the appellant's were individual truck owners who charged for transportation of the sugarcane from the sugarcane collection centers to the respective sugar mills by presenting fortnightly bill and as such no consignment notes were issued. The Department was of the view that the appellantsugar mills have received the service of goods transport agency taxable under section 65(105)(zzp) of the Finance Act, 1994 and accordingly the service tax was required to be paid by them on the amount paid by them to the transporters for this transportation. Accordingly a show-cause notice dated July 1, 2006 was issued to M/s. Bajpur Co-operative Sugar Factory Ltd. for demand of service tax amounting to Rs. 4,07,248 for the period of January 1, 2005 to 2006 along with interest thereon and also for imposition of penalty and a show-cause notice dated June 14, 2007 was issued to M/s. Nandganj for demand of service tax amounting to Rs. 20,05,760 for the period from January 2005 to February 2007 along with interest thereon and also for imposition of penalty. 1.2 While the show-cause notice issued to M/s. Bajpur was adjudicated by the Assistant Commissioner vide order-in-original dated August

3 23, 2008 by which the service tax demand as made in the show-cause notice was confirmed along with interest and besides this, penalty were imposed under sections 77 and 78, the show-cause notice issued to M/s. Nandganj was adjudicated by the Additional Commissioner vide order-inoriginal dated September 11, 2007 by which the service tax demand as Page No: 332 made in the show-cause notice confirmed along with interest and penalty were imposed under sections 76, 77 and 78 of the Finance Act, On appeal being filed by M/s. Nandganj against the Additional Commissioner's Order, the Commissioner (Appeals) vide order-in-appeal dated March 31, 2008 while upholding the levy of service tax held that M/s. Nandganj are eligible for the abatement under Notification No. 32/2004-ST and accordingly remanded the matter to the original adjudicating authority for re-quantifying the service tax demand. Against this order of the Commissioner (Appeals) while M/s. Nandganj have filed the Appeal No. ST/ 573/08, the Department has filed the Appeal No. ST/556/08 against the part of the order extending the benefit of Notification No. 32/2004-ST on the ground that M/s. Nandganj do not satisfy the conditions of this notification, inasmuch as no cognizance can be taken of the declaration regarding non-availment of Cenvat credit by the transporters, as no consignment notes had been issued. 1.4 Against the Assistant Commissioner's order in case of M/s. Bajpur, an appeal was filed before the Commissioner (Appeals) who vide order-in-appeal dated June 16, 2008 upheld the Assistant Commissioner's Order. Against this order of the Commissioner (Appeals), the Appeal No. ST/134/09-CU[DB] has been filed. 1.5 In both these cases the stand of the appellant-sugar mills was that for transportation of the sugarcane from the cane collection centers to the sugar mills, individual truck owners had been engaged and transport charges had been paid to them against their fortnightly bills and no consignment notes or GRs or billties had been issued by the transportation and for this reason, this activity would not attract service tax under section 65(105)(zzp) as goods transport agency service. But this plea was not accepted by the first appellant authority. Heard both the sides. Sh. Bipin Garg, advocate, the learned counsel representing both the appellants, pleaded that for transportation of sugarcane from cane collection centers to the sugar mills, individual truck owners had been engaged, that payment had been made to the individual transporters against periodical bills raised by them, that no consignment notes or GRs or bilties had been issued, that for attracting service tax under section 65(105)(zzp), service should have been provided to a customers by a goods transport agency in relation to transportation of goods by road in a goods carriage, that in terms of section 65(50a) of the Finance Act, 1994, goods carriage has the meaning assigned to it in clause (14) of section 2 of the Motor Vehicles Act, Page No: , that in term of section 65(50b) of the Finance Act, 1994, "goods transport agency" means any commercial concern which provides service in relation to transport of goods by road and issues consignment note by

4 whatever name called, that the service tax under section 65(105)(zzp) is attracted in respect of service provided by a goods transport agency which has issued consignment notes for transportation of goods, that in these cases no consignment notes have been issued, that this fact is clear in the case of M/s. Nandganj from para 3 of the statement of facts in the Revenue's appeal, wherein it is mentioned that transporters do not issue any GRs and challans for transportation of sugarcane and only issue the bills against which the payment is made, that this fact is also clearly mentioned in para 5 of the show-cause notice issued to M/s. Nandganj, wherein it is mentioned that "the transporters of sugarcane do not issue consignment notes for cane transportation, but they raise bills on fortnightly basis wherein, besides other things, quantity of cane transported and place from where transported is also mentioned and thus the bill has all the requisites of consignment note", that same is the position in case of M/s. Bajpur that where transporters engaged in transportation of sugarcane from collection centers to the sugarcane mills did not issue consignment notes, GRs or challans but only issued the fortnightly bills, that these fortnightly bills cannot be called consignment notes, and that since no consignment notes were issued by transporters, the appellant-sugar mills as service recipient are not liable for payment of service tax, as no service had been received from any goods transport agency, and that in view of this, the impugned orders are not sustainable and as such the Revenue's appeal in case of M/s. Nandganj regarding extending the benefit of Notification No. 32/2004-ST is without any merits. Sh. R. Puri, the learned Departmental Representative, defended the impugned order by reiterating the findings of the Commissioner (Appeals) on the point that the appellants have received the service of goods transport agency and emphasised that the fortnightly bills for transportation issued by the transporters are in the nature of the consignment notes. He also pleaded that M/s. Nandganj are not eligible for abatement under Notification No. 32/2004-ST as the conditions of this exemption are not satisfied. We have considered the submissions from both the sides and perused the records. The appellant incurred expenditure on transportation of sugarcane from the cane collection centers to their sugarcane mills and these charges were adjusted against the payment for sugarcane made to the Page No: 334 farmers. The point of dispute is as to whether the transporters are goods transport agency as defined under section 65(50b) of the Finance Act, 1994 and whether the appellant as recipient of the service provided by the transporters would be liable to pay service tax in terms of the provisions of rule 2(1)(d)(v) of the Service Tax Rules. In term of section 65(105)(zzp), the taxable service means "any service provided to a customer, by a goods transport agency, in relation to trans-- port of goods by road in a goods carriage". In terms of section 65(50a) ibid. "goods carriage" has the meaning assigned to it in clause (14) of section 2 of the Motor Vehicles Act, In terms of section 65(50b), "goods transport agency" means any commercial concern which provides service in relation to transport of goods by road and issues consignment note, by whatever name called. The service tax has been demanded from the appellants as service recipient under rule 2(1)(d)(v) of the Service Tax Rules, 1994 read with Notification No. 35/2004(ST) dated December 3, 2004, on the payments made by them to transporters against the fortnightly bills

5 being presented by them. While admittedly no consignment notes or GRs have been issued by the transports, according to the Department the transporter's bills are in the nature of the consignment notes. Under rule 4B of the Service Tax Rules, 1994, "any goods transport agency which provides service in relation to transport of goods by road in a goods carriage shall issue a consignment note to the customer". In terms of Explanation to rule 4B, "consignment note" means a document, issued by goods transport agency against the receipt of goods for the purpose of its transport by road in a goods carriage, which is serially numbered and contains the name of consignor and consignee, registration number of the goods carriage in which goods are transported, details of goods transported, details of the place of origin and destination, person liable for paying service tax whether consignor, consignee or goods transport agency. Thus mere transportation of the goods in a motor vehicle is not the service provided by a goods transport agency. A goods transport agency in term of its definition under section 65 (50b) provides service in relation to transportation of goods under a consignment note which should have the particulars as prescribed in Explanation to rule 4B. In the present case admittedly no consignment notes have been issued. The fortnightly bills cannot be treated as consignment notes, as a consignment note issued by goods transport agency represents its liability to transport the consignment handed over to it to the destination and deliver the same to the consignee and merely a bill issued for transportation of goods cannot be treated as consignment note. The fact Page No: 335 of non-issue of consignment to M/s. Nandganj is admitted in the showcause notice itself. In case of M/s. Bajpur though it is not mentioned in the show-cause notice, this plea has been made by the appellant and the same has not been refuted. The transportation of goods by individual truck owners without issue of consignment note, GR's and billties, etc., as prescribed in rule 4B of the Service Tax Rules, would be simple transportation and not the service of goods transport agency which involves not only undertaking the transportation of the goods handed over to it but also undertaking delivery of the goods to the consignee and also temporary storage of the goods till delivery. When the transports did not issue consignment notes or GRs or challans or any documents containing the particular as prescribed in Explanation to rule 4B of the Service Tax Rules, 1994, the transporters cannot be called "goods transport agency" and, hence, in these cases, the service of transportation of sugarcane provided by the transporters would not be covered by section 65(105)(zzp). In view of this we hold that there will be no service tax liability on the appellant sugarcane mills, as they have not received the service from a goods transport agency. In view of this the impugned orders are not sustainable and the same are set aside. The appeals filed by M/s. Nandganj and M/s. Bajpur are allowed. As regards the Revenue's appeal, since it has been held that there is no service tax liability of the appellants, there would be no merit in it and the same is dismissed. Page No: 336