CESTAT, NEW DELHI BENCH
Bazpur Co-operative Sugar Factory Ltd.
Commissioner of Central Excise, Meerut-II
STAY ORDER NO. ST/S/533/2012-CUS
APPLICATION NO. ST/STAY/2761/2011-CUS
APPEAL NO. ST/1309/2011-CUS
APRIL 16, 2012
Mathew John, Technical Member
The Appellants are engaged in the manufacture of VP sugar and molasses. For their manufacturing activity, they collected sugarcane from farmers at various collection centres. They engaged individual farmers for transportation of sugarcane from collection centres to the factory and paid charges for such transportation. The Appellants were not paying any service tax on such services received by them for transportation of goods as per the provisions of Rule 2(d)(v) of Service Tax Rules, 1994. Revenue made out a case that as the recipient of services for transportation of sugarcane from collection centres to the factory, the Appellants were liable to pay service tax on the amounts paid to the transporters. Based on such reasoning, Show Cause Notices were issued for the periods April 2008 to December 2008 and January 2008 to March 2008 demanding service tax along with interest and penalties. On adjudication, an amount of Rs. 98,591/- has been confirmed for the period April, 2008 to December 2008 along with interest and penalties and an amount of Rs. 2,90,003/- was confirmed for the period January 2008 to March, 2008 along with interest and penalties. Aggrieved by the adjudication orders, the Appellants had filed appeal with the Commissioner (Appeals) who waived penalties imposed under Section 78 but confirmed penalty under Section 77 and no relief has been given in the matter of service tax to be paid. Aggrieved by the orders of the Commissioner (Appeals), the Appellants have filed the present appeal along with application for waiver of pre-deposit of dues arising from the impugned orders for admission of appeal.
2. The Counsel for the Appellant submits that the truck owners who were transporting the sugarcane from the collection centres to the factory cannot be considered as “Goods Transport Agency” within the meaning of the definition given to the expression in 65(50) of Finance Act, 1994. According to him, only persons booking cargo and issuing consignment notes can be considered as goods transport agency. The definition of goods transporters agency is re-produced below .-
“Section 65(50b) “goods transport agency” means any person who provides service in relation to transport of goods by road and issues consignment note by whatever name called Section 65(105)(zzp) to a customer, by a goods transport agency, in relation to transport of goods by road in a goods carriage.”
3. He submits that since the sugarcane which was collected at the collection centres was already property of the Appellant. There was no need for any consignment note for despatching the same using the services of truck owners who were mostly individual firms. Therefore he submits that there is no merits in the case made out by Revenue and the appeal should be heard without any pre-deposit.
4. Opposing the prayer, ld. A.R. submits that any person who transports the goods is required to issue consignment note as per the provisions of Rule 4B of Service Tax Rules, 1994. The fact that the transporters in this case did not comply with the said service tax rules cannot be a reason to absolve the receivers of such service from tax liability. He further points out that the plea regarding transportation by individual farmers is not correct because there is no proof that the trucks were owned by farmers. The argument that farmers are using their trucks for this activity and not for goods transport activity in general cannot be true because nobody can invest in trucks and keep the truck idle except during sugar season. So if at all farmers are owning the trucks it is because they are undertaking goods transport operation as another profession. Therefore, the truck owners who transported sugarcane has to be at par with any other truck owners and the issue decided accordingly.
5. We have considered arguments on both sides. What we find is that the definition of “Goods Transport Agency” under Section 65(50b) of Finance Act, 1994 and provision of Rule 4A (sic : 4B) of Service Tax Rules are logically inconsistent. The entry in the Act defines “Goods Transport Agency” as one which issues consignment notes and thereafter Rule 4B says that “Goods Transport Agency” has to issue consignment note. So which criteria has to be satisfied first is not clear. That is to say if a goods transport operator does not issue consignment note he does not come within the meaning of “Goods Transport Service” and then the requirement under Rule 4B also is not enforceable.
6. We have also considered the pronouncements of the Finance Minister in para 149 of the budget speech while introducing the entry for tax on “Goods Transport Agency” in the budget of 2004. It appears that there was clear intention not to levy service tax on individual truck owners except in cases where the cargo for such trucks are booked by “Goods Transport Agency” which is in the business of booking cargo and issuing the consignment note in the normal course of their business. Therefore, at this prima facie stage we consider it proper to waive pre-deposit of dues arising from the impugned orders for admission of appeal. We order accordingly. Further, there shall be stay on collection of such amounts during the pendency of the appeal.