Threshing Of Tobacco Leaves Not Taxable Under BAS; Service Tax Demand On Freight Set Aside For Want Of Consignment Note: CESTAT Hyderabad
Pranav B Prem
The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside the service tax demand raised on tobacco threshing charges and freight payments made to truck operators, holding that the levy under both Business Auxiliary Service (BAS) and Goods Transport Agency (GTA) categories was unsustainable in law. The Bench comprising Angad Prasad (Judicial Member) and A.K. Jyotishi (Technical Member) observed that in the absence of statutory documents necessary to bring the activity within the scope of GTA service, the service tax demand on freight payments could not be sustained. The Tribunal also held that the demand on threshing of tobacco leaves under BAS was liable to be set aside.
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The dispute arose from a service tax demand raised against M/s Chebrolu Agros Pvt. Ltd. for the period from April 2010 to March 2011. The Department alleged that the assessee was liable to pay service tax on threshing of tobacco leaves under the category of Business Auxiliary Service and on freight payments made to truck operators under the Goods Transport Agency service.
The original adjudicating authority confirmed the demand under both categories, which led to the filing of the appeal before the Tribunal. At the time of hearing, none appeared on behalf of the appellant, while the Department was represented by its Authorized Representative. The Bench proceeded to decide the appeal on merits based on the records available.
On the issue of levy of service tax on tobacco threshing charges, the Tribunal noted that the issue was no longer res integra. Reliance was placed on the decision of the Tribunal in M.L. Agro Products Ltd., wherein similar activities were held not liable to service tax under BAS. The Tribunal also took note that in the appellant’s own earlier case, the demand under BAS had already been set aside.
Accordingly, the Bench held that there was no justification to sustain the service tax demand on threshing of tobacco leaves under the category of Business Auxiliary Service.
With regard to the demand under the Goods Transport Agency service, the Tribunal undertook an examination of the legal position and observed that although an earlier order had upheld the demand, no detailed reasoning had been provided, particularly on the statutory requirement of issuance of a consignment note.
The Tribunal reiterated the settled legal principle that unless a consignment note or a document resembling a consignment note is issued, the transport service cannot be classified as GTA service under the Finance Act, 1994. It was noted that the appellant had engaged private truck operators and that there was no evidence on record to establish issuance of consignment notes.
The Bench further observed that the adjudicating authority had failed to consider several binding decisions of the Tribunal cited by the appellant, including Lakshminarayana Mining Co., Kankadurga Agro Oil Products, KMB Granites, Bellary Iron & Ores, Salem Co-operative Sugar Mills, and Shanti Fortune India Pvt. Ltd., which consistently held that absence of a consignment note excludes liability under GTA service. Holding that the demands under both Business Auxiliary Service and Goods Transport Agency service were unsustainable, the Tribunal set aside the entire impugned order and allowed the appeal in full.
Appearance
For Respondent: K. Raji Reddy
Cause Title: M/s Chebrolu Agros Pvt Ltd. Versus Commissioner of Central Excise And Service Tax
Case No: Service Tax Appeal No. 26047 of 2013
Coram: Angad Prasad (Judicial Member) and A.K. Jyotishi (Technical Member)
