Case Law Details
Deccan Mining Syndicate Private Limited Vs Union of India (Karnataka High Court)
Material Facts
The assessee, engaged in extraction, processing and export of iron ore, filed a Central Excise Appeal challenging the CESTAT’s order dated 31.03.2022, which had dismissed its appeal against rejection of a refund claim.
During the period from 01.01.2006 to 28.02.2007, the assessee availed transportation services for movement of iron ore from the mine head to the processing plant and thereafter to railway sidings, river side and ports. Following an investigation by the Preventive Division, the assessee deposited ₹1,07,03,293 towards service tax and education cess on transportation charges.
The assessee subsequently sought refund, contending that the transporters were individual truck owners and not Goods Transport Agencies (GTAs), and therefore no service tax was payable. The adjudicating authority rejected the refund claim. The Commissioner (Appeals) and the Tribunal also rejected the assessee’s challenge.
Procedural History
- The assessee deposited service tax and education cess during investigation.
- Refund application was rejected by the adjudicating authority.
- Appeal before the Commissioner (Appeals) was dismissed.
- CESTAT dismissed the assessee’s appeal.
- The assessee filed the present appeal before the Karnataka High Court.
Legal Issue
Whether, in the absence of consignment notes issued by a Goods Transport Agency, transportation services provided by individual truck owners could be subjected to service tax under the category of Goods Transport Agency service, and whether the refund claim was liable to be allowed.
Relevant Statutory Provisions
- Section 65(50b) of the Finance Act, 1994
- Rule 4B of the Service Tax Rules, 1994
Parties’ Submissions
Assessee’s Submissions
The assessee contended that:
- Issuance of a consignment note under Section 65(50b) was an essential requirement for classification as Goods Transport Agency service.
- The “pay slips” relied upon by the authorities were merely internal documents prepared for identification of vehicles and payment of freight and could not be treated as consignment notes under Rule 4B.
- Since no consignment notes had been issued by the transporters, no service tax liability arose and the amount deposited during investigation was refundable.
The assessee relied upon several Tribunal decisions in support of its contentions.
Revenue’s Submissions
The Revenue submitted that:
- The pay slips contained all essential particulars contemplated under Rule 4B, including vehicle details, description of goods, origin, destination and acknowledgment by the transporter.
- The Tribunal correctly held that these documents constituted consignment notes.
- The definition of Goods Transport Agency includes individual truck owners who undertake transportation and issue documents in the nature of consignment notes.
- Consequently, the refund claim was rightly rejected.
Court’s Findings and Reasoning
The High Court observed that it was undisputed that the assessee had engaged individual truck owners for transportation of iron ore. The dispute was confined to whether such transportation fell within the definition of Goods Transport Agency under Section 65(50b).
The Court held that Section 65(50b) defines a Goods Transport Agency as any person providing transportation of goods by road who issues a consignment note “by whatever name called.” The provision does not distinguish between incorporated entities, partnerships or individual transporters.
The Court noted that the Tribunal had found that the pay slips contained:
- vehicle numbers,
- description and quantity of goods,
- loading and unloading points, and
- acknowledgment by the transporter.
The Court observed that the statutory emphasis is on the nature and contents of the document rather than the title assigned to it. Since the pay slips substantially evidenced receipt and transportation of goods and contained the material particulars ordinarily associated with a consignment note, describing them as “pay slips” did not alter their legal character.
The Court also rejected the contention that the pay slips were merely internal documents, noting the concurrent findings of the authorities below that the documents recorded the movement of goods and contained material particulars relating to transportation.
The High Court further held that the judicial decisions cited by the assessee were distinguishable on facts, as those cases involved situations where no consignment notes had been issued, whereas in the present case the pay slips answered the description of consignment notes under Section 65(50b).
Final Ruling
The Karnataka High Court held that:
- the Tribunal was justified in classifying the transportation services as Goods Transport Agency services;
- the pay slips constituted consignment notes within the meaning of Section 65(50b) of the Finance Act, 1994;
- the levy of service tax was valid;
- the refund claim could not survive once the levy was upheld; and
- the appeal was dismissed.
Cases Discussed
- Chartered Logistics Ltd. vs Commissioner of Central Excise (CESTAT Ahmedabad), (2024) 16 Centax 473 (Tri – Ahmd)
- Mahanadi Coalfields Ltd vs Commissioner of Central Excise (CESTAT Kolkata), 2022 (57) GSTL 242 (Tri – Kolkata)
- East India Minerals Ltd Vs CCE & ST, BBSR II (CESTAT Kolkata), 2021 (44) GSTL 90 (Tri- Kol)
- Lakshminarayana Mining Vs Commissioner of Service Tax (CESTAT Bangalore), 2019 (27) GSTL 745 (Tri – Bang)
- CC & CE, Raigad Vs JWC Logistics Pvt Ltd (CESTAT Mumbai), 2019 (22) GSTL 237 (Tri – Mum)
- Nandganj Sihori Sugar Co Ltd Vs CCE, Lucknow (CESTAT Delhi), 2014 (34) STR 850 (Tri-Del)
SEO Titles (Five Alternatives)
Refund Claim Rejected, Pay Slips Held as Consignment Notes for GTA Service: Karnataka HC
Service Tax on Transportation by Individual Truck Owners Upheld: Karnataka HC
Refund Denied After Pay Slips Treated as Consignment Notes Under Section 65(50b): Karnataka HC
Appeal Dismissed, Transportation Classified as GTA Service: Karnataka HC
Service Tax Refund Rejected on Goods Transport Agency Classification: Karnataka HC
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
This Central Excise Appeal is filed by the assessee assailing the Final Order Nos. 20133-20134/2022 dated 31.03.2022 in STA.No.846 and 864 of 2009 passed by the Customs, Excise and Service Tax Appellate Tribunal, Bangalore (for short, “the Tribunal’), whereby the Tribunal dismissed the appeal preferred by the assessee challenging the rejection of its refund claim.
2. The appellant is a company engaged in extraction, processing and export of iron ore. During the relevant period, i.e. from 01.01.2006 to 28.02.2007, the appellant availed transportation services for movement of iron ore from the mine head to the processing plant and thereafter to the railway siding, river side and ports for shipment. Pursuant to investigation conducted by the Preventive Division, the appellant deposited a sum of Rs.1,07,03,293/- towards service tax and education cess on the transportation charges incurred by it.
3. Subsequently, the appellant filed an application before the adjudicating authority seeking refund of the amount so deposited, contending inter alia, that the transporters engaged by it were individual truck owners and not Goods Transport Agencies and therefore no service tax was payable under the category of Goods Transport Agency service. The refund claim came to be rejected by the adjudicating authority. Subsequent appeal preferred by the appellant before the Commissioner (Appeals) also got rejected. Aggrieved thereby, the appellant approached the Tribunal as state supra. The Tribunal, by the impugned order, dismissed the appellant’s appeal. Aggrieved by the said order, the present appeal is filed.
4. Heard learned counsel Sri. M.S. Nagaraj, for the appellant-assessee and learned Central Government Standing Counsel Sri. Jeevan J.Neeralgi, for the respondent-Revenue. perused the material placed on record.
5. Apart from urging several contentions learned counsel appearing for the appellant, contended that the impugned order passed by the Tribunal suffers from complete misappreciation of the statutory scheme governing Goods Transport Agency service under the Finance Act, 1994 (for short, ‘the Act, 1994’). It is submitted that under Section 65(50b) of the Act, 1994, issuance of a consignment note is an essential requirement for classification of a service as GTA service and, in the absence of such consignment notes, no service tax liability could arise under the said category.
6. It is further contended that the “pay slips” relied upon by the authorities were merely internal documents prepared by the appellant for identification of vehicles and payment of freight charges and could not be treated as consignment notes contemplated under Rule 4B of the Service Tax Rules, 1994. Hence the activity in question was not taxable as GTA service and the amount deposited during investigation was liable to be refunded. Accordingly, he prays to allow the appeal. To buttress his arguments and in support of his contention, the learned counsel has placed reliance on following judgments:
1. Chartered Logistics Ltd. vs Commissioner of Central Excise [(2024) 16 Centax 473 (Tri – Ahmd)
2. Mahanadi Coalfields Ltd vs Commissioner of Central Excise [2022 (57) GSTL 242 (Tri – Kolkata)]
3. Lakshminarayana Mining Vs Commissioner of Service Tax 2019 (27) GSTL 745 (Tri Bang)
4. East India Minerals Ltd Vs CCE & ST, BBSR II [2021 (44) GSTL 90 (Tri- Kol)]
5. CC & CE, Raigad Vs JWC Logistics Pvt Ltd [2019 (22) GSTL 237 (Tri – Mum)]
6. Nandganj Sihori Sugar Co Ltd Vs CCE, Lucknow [2014 (34) STR 850 (Tri-Del)]
7. Per contra, learned CGSC, appearing for the Revenue supported the impugned order and submitted that the findings recorded by the Tribunal are based on the material available on record and do not warrant interference. It is contended that the documents described as “pay slips” contained all essential particulars contemplated under Rule 4B of the Service Tax Rules, including details relating to the goods transported, vehicle particulars, place of origin and destination and acknowledgment by the transporter. The Tribunal was therefore justified in holding that such documents constituted consignment notes.
8. It is further submitted that the definition of Goods Transport Agency is sufficiently broad to include individual truck owners who undertake transportation of goods and issue documents in the nature of consignment notes. Consequently, the appellant is not entitled to any refund of the amount paid and the appeal deserves to be dismissed.
9. Having regard to the rival submissions sole point that would arise for our consideration is:
“Whether the Tribunal was justified in rejecting the appellant’s claim that, in the absence of consignment notes issued by a Goods Transport Agency, no service tax liability could arise under the category of “Goods Transport Agency” service?”
10. As could be gathered from the records, the fact that the appellant had engaged individual truck owners for transportation of iron ore during the relevant period is not in dispute. The dispute essentially centres around the question as to whether such transportation would fall within the ambit of “Goods Transport Agency” service as defined under Section 65(50b) of the Finance Act, 1994.
11. We are unable to accept the principal contention of the appellant that, since the transporters were merely individual truck owners and had not issued consignment notes, the service received by the appellant could not be subjected to service tax under the category of GTA service. It is pertinent to note that Section 65(50b) defines “Goods Transport Agency” as,
“Any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called”.
On interpreting the above definition, it does not make any distinction between an incorporated entity, a partnership concern or an individual transporter. Therefore, the mere fact that the transportation was undertaken by individual truck owners would not, by itself, exclude the activity from the scope of the definition.
12. The Tribunal has noticed that the documents submitted as “pay slips” contained particulars relating to the vehicle number, description and quantity of goods transported, loading and unloading points and acknowledgment of the transporter. Significantly, Section 65(50b) employs the expression “consignment note, by whatever name called”. The emphasis of the statute is therefore on the nature and contents of the document and not on the name assigned to it. Once the document substantially depicts receipt and transportation of goods and contains the particulars ordinarily associated with a consignment note, the mere fact that it is described as a “pay slip” would not alter its legal character.
13. The contention that the pay slips were merely internal documents of the appellant and not the consignment notes, also does not hold much water. The authorities below have concurrently recorded a finding, affirmed by the Tribunal, that the said documents depicted the movement of goods and contained material particulars concerning the transportation undertaken.
14. The judgments relied upon by the appellant-assessee are distinguishable on facts and, therefore, do not advance its case. In all those decisions, the Courts found that no goods consignment notes had been issued by the transporter. In the present case, however, as discussed hereinabove, the pay slips issued by the transporter answer the description of a consignment note and squarely fall within the ambit of Section 65(50b) of the Finance Act, 1994. Consequently, the ratio laid down in the said decisions is inapplicable to the facts of the present case.
15. In such circumstances, we are of the considered view that the Tribunal was justified in holding that the transportation services received by the appellant were liable to be classified under the category of Goods Transport Agency service. Once the levy itself is held to be valid, the consequential claim for refund cannot survive. We are therefore satisfied that the impugned order does not suffer from any legal infirmity warranting interference. The point for consideration is accordingly answered against the appellant and in favour of the Revenue. Accordingly, the CEA stands dismissed.
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