Service of transportation of goods provided to recipient outside India is not taxable

ATA Freightline (India) Pvt. Ltd. Vs Commissioner of CGST (CESTAT Mumbai)

Facts- M/s ATA Freightline (India) Pvt Ltd is in the business of integrated logistics and cargo transportation and, in conjunction with M/s ATA Freightline Ltd, New York, provides end-to-end delivery; the recompense from the overseas entity for the period between July 2012 and March 2015, to the extent attributable to carriage within India, was sought to be taxed by recourse to Place of Provision of Service Rules, 2012. The span of the dispute lies entirely within scheme of levy under section 66B of Finance Act, 1994 imposed on all ‘services’, as defined in section 65B (44) of Finance Act, 1994, that were either not excluded by section 66D of Finance Act, 1994 (commonly known as ‘negative list’) or not exempted by notification issued under section 93 of Finance Act, 1944.

The genesis of the dispute, as well as the concluding of the proceedings, is founded upon the records maintained by the appellant which, inter alia, included receipts from the overseas entity that, in the accounts, was disaggregated to correspond with the stages involved. According to tax authorities, the value corresponding to the leg within the country, from out of the consolidated consideration, was, owing to service being performed on goods while on the soil of India, liable to tax and, not having been discharged, was recoverable under the authority of section 73 of Finance Act, 1994. Per contra, the appellant contends that the composite engagement to deliver goods outside the country, for which consideration was received from the recipient of services located outside India, is inextricably linked with export of goods and, therefore, performed outside the ‘taxable territory’ envisaged under Finance Act, 1994. Both sides claim coverage under different rules of the Place of Provision of Service Rules, 2012.

Conclusion- Place of Provision of Service Rules, 2012 is not a provision for charging of tax; it is limited to determination of location of taxable entity as an adjunct to the charging provision in section 66 B of Finance Act, 1994. The impugned order has not evaluated the impugned activity from that perspective. In the context of identifiable recipient of service located outside the taxable territory, and concomitant absence of ‘goods provided by recipient of service’ as well as the marked absence of recipient of service in the truncated segment of impugned activity and of the goods being put to use for rendering of service, rule 4 of Place of Provision of Service Rules, 2012 is not applicable. That the activity is transportation of goods is the foundation of the proceedings against the appellant, as is evident from the contrived segmentation of stages according to geography and from the unarguable existence of recipient outside India; rule 10 of Place of Provision of Service Rules, 2012 is unambiguously clear about the consequent non-taxability.

FULL TEXT OF THE CESTAT MUMBAI ORDER

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