If intermediary service is subservient to the original transaction, mere break of the original transaction in transit does not bring out a different transaction. It may be stated that nature, character and terms of a contract decides incidence of tax of intermediate transaction. If the character of the service provided by intermediary in transit is GTA without the original transaction coming to an end, the service provided by an intermediary may not be construed to be a different transaction. But all intermediate transactions may not necessary be characterised as original transaction unless and until both transactions are integrally and indispensably related or connected to each other.
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST BLOCK NO. 2, R K PURAM, NEW DELHI
Service Tax Appeal No. 402 of 2007 (DB)
FINAL ORDER NO.ST/223/2011
Arising out of the Order-in-Original No.C/Comm/ST/IIND/2007 Dated: 23.4.2007
Passed by the Commissioner (Appeals), Customs & Central Excise, Indore
Date of Decision: 2.6.2011
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Per: D N Panda:
Ld. Counsel Shri Ravi Raghvan submits that the service provided by the Appellant was GTA service as an intermediary. Such service was in the nature of loading/ unloading/packing/ unpacking/transshipping and warehousing in transit in respect of GTA services provided originally to transport the goods consigned from the origin to the known destination. Enroute services are also provided as per arrangement between principal GTA service provider and intermediary service provider to ensure the originally consigned goods reachable to its ultimate destination. The intermediary service neither being an independent one nor of a new character, that does not change the character of original GTA service. But the authorities without properly appreciating no new service provided by the intermediary nor any independent service was provided while uninterrupted service was provided to same consignee in transit levied tax on the appellant. The principal activity of GTA when taxable, service tax demand of Rs.44,26,850/- by the adjudication order followed by different consequences of law does not arise against the appellant.
2. Ld. Counsel supports his argument relying on the notification No.1/2009/ST, dated 05.01.2009 and also circular No. 104/7/2008/ST, dated 06.08.2008 stating that intermediary transactions emanating from original transaction is immune from double taxation when the intermediary is not recipient of service. So also he says that the adjudicating authority had no advantage of knowing the law applicable, since the notification and circulars were issued subsequent to passing of the adjudication order. Such subsequent development does not bring transit service provided on behalf of principal GTA to tax net. In view of the notification recognised and characterising the intermediary service to be GTA service only without nature of the same being changed, there shall be no levy on the appellant. The law applicable after passing of the adjudication order has been given proper recognition by the same authority in the case of the same appellant in Order-In-Original No. Ind/421&422/10 passed on 08.12.2010. Therefore, he says that if the authority passes similar order, the appellant may not have further grievance.
3. Ld. DR on the other hand submits that legislation on the subject of GTA service has been appreciated by the adjudicating authority and he has passed appropriate order. Subsequent, amendment, notification and circulars shall have no bearing when the appellant became a new service provider getting consideration for the service provided.
4. Heard both sides and perused the records.
5. The notification and circulars cited by Ld. Counsel for appellant including the order mentioned by him as aforesaid provide basis to ascertain status of the intermediary bringing nexus of the original GTA service provided with the consignee in respect of the origin of transaction and occasioning movement of the consignment to its destination through the intermediate appellant. If intermediary service is subservient to the original transaction, mere break of the original transaction in transit does not bring out a different transaction. It may be stated that nature, character and terms of a contract decides incidence of tax of intermediate transaction. If the character of the service provided by intermediary in transit is GTA without the original transaction coming to an end, the service provided by an intermediary may not be construed to be a different transaction. But all intermediate transactions may not necessary be characterized as original transaction unless and until both transactions are integrally and indispensably related or connected to each other.
6. The notification and circular issued by the authority as quoted by Shri Ravi Raghvan, may enable the authority to record finding testing true nature of the transactions made by the parties. Their contractual terms may decide incidence of tax. Making thorough verification of chain of evidence, consignment notes, origin and destination of the transaction, understanding of consignor and the consignee, contract of GTA service provider with intermediary, the authority below shall be able to come to a rational conclusion. There may not be confusion because the authorities have already made exercise in terms of order dated 08.12.2010 as cited by Ld. Counsel. But what that Authority is required to be satisfied is that the transaction has suffered tax at the appropriate stage in appropriate hand.
7. In view of the above discussion, we remand the matter to the original authority who shall carry out aforesaid examination of chain of evidence envisaged by the notification No. 1/2009 dated 05.01.2009 expressing legislative intention to avoid double taxation of the same transaction. By saying so, we do not prevent the original authority from exercising his power to examine the matter in controversy according to law granting fair opportunity- of hearing to the appellant. He shall pass a reasoned and speaking order. Accordingly, we remand the matter to the original authority to decide the matter afresh.
8. Shri Ravi Raghvan prays that when the matter is remanded, the appellant should not be prevented to argue all legal issues that arises out of the dispute in question and lead evidence in defence. There shall be no hesitation to look into such aspect by the original authority.
9. The matter is remanded in above terms setting aside the impugned order.
(Dictated & pronounced in the Open Court .)