Case Law Details
M/s Rathi Tiles Pvt. Limited Vs CCE (CESTAT Delhi)
The question which has been decided by the lower authorities is whether the appellant is liable to pay service tax by considering such debit notes as consignment notes. I have perused the various case laws cited by both The issue which stands settled in the various case laws cited by the appellant is that as long as no consignment note is issued in terms of Rule 4B of the Service Tax Rules, 1994 by the transporter, the service tax liability under the category of GTA service does not arise. There is no dispute in the facts of the present case that the individual truck owners do not issue any consignment notes. The debit notes issued by the appellant indicating the freight payable cannot be considered as a consignment note as per Rule 4B ibid.
FULL TEXT OF THE CESTAT JUDGMENT
The present appeals are filed against the Order-in-Appeal No. 240 – 242(SRM) ST/JDR/2018 dated 28.02.2018/08.03.2018 passed by the Commissioner (Appeals), Central Excise & CGST, Jodhpur.
2. Brief facts involved in all the appeals are identical and therefore the appeals are taken together for a decision. The appellant is engaged in the manufacture of marble slabs and tiles. They receive marble blocks from mines and cleared the final products from their factory. The dispute in the present case is regarding the payment of service tax on freight charges paid by the appellant for transport of marble slabs from the mines to the appellant’s factory. The claim of the appellant is that such transportation is undertaken through individual truck owners who are paid the freight by the appellant and the only document which is issued for the transaction is a debit voucher prepared by the appellant. The Department was of the view that the appellant is liable to pay service tax on such freight charges under the category of Goods Transport Agency services, under reverse charge basis in terms of Rule 2(1)(d)(b) of the Service Tax Rules, 1994 read with the Notification No. 35/2004-ST dated 03.12.2004. Accordingly, both the authorities below have ordered payment of service tax and aggrieved by the same the present appeals are filed by the appellant.
3. With the above background, heard Ms. Asmita Nayak, ld. Advocate for the appellant as well as Sh. H. C. Sai ni, ld. AR for the Revenue.
4. The submission on behalf of the appellant is summarised below:
(i) She submitted that the dispute pertains to only transport of marble slabs from the mines to the appellant factory. Such transport is carried out through individual truck owners who do not issue any consignment note. The appellant pays freight in cash to individual truck owners and debit notes are issued indicating the amount of freight paid. She submitted that the said debit notes cannot be considered as consignment notes and the liability of the appellant on payment of service tax on DTA on reverse charge basis does not arise.
(ii) In this connection, she also relied on several case laws in which it has been held that the recipient’s liability under reverse charge mechanism does not arise in a case where the consignment note is not issued.
(ii) She relied on the following case laws:
i)South Eastern Coalfields Ltd. vs. CCE-2017 (10) GSTL 50 (Tri. Del.)
ii) Ultratech Cement Ltd. vs. CCE -2018 (10) GSTL 80 (Tri. Mum.)
5. Ld. AR appearing for the Revenue justified the impugned order. In this connection, he relied on the following case laws:
i) M. L. Agro Products Ltd. vs. CCE&ST, Guntur 2017 GSTL 94 (Tri. Hyd.)
ii) CCE, Salem vs. KMB Granites Pvt. Ltd. 2014 (35) STR 63 (Mad).
He emphasised that the Hon’ble Madras High Court has upheld the payment of service tax in the case where individual truck owners have been engaged for transporting granite slabs / tiles.
6. After hearing both sides and on perusal of record, I note that the issue involved in the present case is liability of payment of service tax under the category of GTA. The appellant, who is the manufacturer of marble products, gets slabs from mines and get the transported through individual truck owners to their factory. The payment of freight is made by the appellant to such individual truck owners. It is seen from the record that the individual truck owners do not issue any invoice/ document/ consignment note for transport of such marble blocks. The only document which is generated by the appellant by way of debits notes indicating the freight paid for such transport.
7. The question which has been decided by the lower authorities is whether the appellant is liable to pay service tax by considering such debit notes as consignment notes. I have perused the various case laws cited by both The issue which stands settled in the various case laws cited by the appellant is that as long as no consignment note is issued in terms of Rule 4B of the Service Tax Rules, 1994 by the transporter, the service tax liability under the category of GTA service does not arise. There is no dispute in the facts of the present case that the individual truck owners do not issue any consignment notes. The debit notes issued by the appellant indicating the freight payable cannot be considered as a consignment note as per Rule 4B ibid.
8. I have also perused the decision of the Hon’ble Madras High Court cited by the ld. AR for the Revenue. Though, it has dealt with a case of individual truck operators, the Hon’ble High Court has decided a different issue and hence it is not applicable to the facts of the present case.
9. In the light of the various case laws, I am of the view that the liability for payment of service tax under GTA cannot be sustained against the appellant in the absence of consignment notes.
10. In the result, the impugned order is set aside and appeals are allowed.
(Dictated and pronounced in the open Court).
