'Goods Transport Agency' was taxable under Section 65(105)(zzp) as 'any service provided or to be provided to any person by a goods transport agency, in relation to transport of goods by road in a goods carriage.' Section 65(105)(zzp) read with Section 65(50b) of the Finance Act stated that any person who provided service in relation to transport of goods by road and issued consignment note by whatever name called, would be covered under the ambit of 'Goods Transport Agency.' In terms of Rule 2 of the Service Tax Rules, the Good Transport Agency was taxable under reverse charge mechanism i.e., the tax was payable by the recipient of the services. No demand could be raised against the provider of Goods Transport Agency. Further, in terms of Rule 2(1)(d)(i)(B) of Service Tax Rules 'any person who pays or is liable to pay freight either himself or through his agent for the transportation of such goods by road in goods carriage' would be liable to pay service tax. That implies that any person who was liable to freight or actually paid freight would be liable to pay service tax in case of 'Goods Transport Agency.' However, if such person was located in a non-taxable territory, the provider of such service shall be liable to pay Service Tax, i.e., GTA would pay taxes to government exchequer.
A case was argued by our team before the Hon'ble CESTAT Delhi, wherein the Appellant was a subsidiary of M/s OJSO Power Machines, Russia and was engaged in providing the services like Erection and Commissioning of turbine generators, Management Maintenance and Repair Service & Consulting Engineer Service, in relation to power generations plants. The Appellant entered into Contracts with NTPC for setting up Super Thermal Power Projects. As per the terms of the contracts, NTPC imported certain equipment from related parties of the appellant located in Russia and also the appellant supplied indigenous plant and equipment and supplies to NTPC. In pursuance of the contracts, the appellant was required to transport the equipment and other supplies to the site, for which it raised an invoice to NTPC at 2% of the sale value of the goods supplied. For this purpose, the appellant hired other transporters to transport the equipment and paid them for the transport and also discharged service tax as a recipient of the service. The department raised the demand on 2% transportation charges under GTA Services which it received from NTPC. On the behalf of the Appellant, it was submitted by our team that the appellant is not a 'Goods Transport Agency' as it had not issued any consignment note and 2% of the value of goods received from NTPC was towards the logistics support transportation regardless of the actual charges incurred by it. Even if it is considered that the appellant is providing a 'Goods Transport Agency' service, in terms of Rule 2(1) (d) (i) (B), the recipient of service is liable to pay service tax and not the service provider, so the liability would be on NTPC not appellant. On behalf of the Revenue, the findings of the impugned order were reiterated.
The Hon'ble Bench after considering the submissions made, facts of the case and the provisions of law applicable, found that it is evident from the records that the appellant's contracts were for supply of the goods and provision of Erection, Commissioning and Installation and Management Maintenance Service. Nothing in the records before us show that the appellant was providing 'Goods Transport Agency Service' to NTPC. Moreover, in case of Goods Transport Agency, the person liable to pay service tax is the one who is liable to pay the freight for the transportation of goods and that would have been NTPC in the present case. The Appellant had already discharged the service tax on the service of 'Goods Transport Agency' engaged for transporting the goods. Therefore, there is nothing to establish that the appellant was providing 'Goods Transport Agency Service' to NTPC and it was charging 2% towards the cost of transportation of goods only.
The Hon'ble Bench with the above observations and findings, set aside the impugned order and allowed the appeal with consequential relief to the appellant.
Case details — Power Machines India Ltd. v. Commissioner of Service Tax (Adjudication), New Delhi
Forum — CESTAT
Case No. — Final Order No. 51181/2023 dated 12.09.2023
Represented by — CA Atul Kumar Gupta & Adv. Varun Gaba