By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
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Scope of GTA service – Held, “commercial concern” includes individual truck operator.
Facts: The appellant (manufacturer) availed GTA services for transporting its inward as well as outward transportation of goods. Revenue demanded tax under ‘GTA ’ service under reverse charge mechanism as per Rule 2(1)(d) (v) of Service Tax Rules, 1994. Appellant contended that services were availed from individual transport operators and not from GTA . Tribunal decided the matter in favour of the appellant following the judgments of the Bangalore Tribunal in cases of Lakshminarayana Mining Co. vs. CST [2010] 24 STT 61 and CCE & C vs. Kanaka Durga Agro Oil Products (P.) Ltd. [2009] 22 STT 435. Aggrieved by the Tribunal’s decision, revenue filed an appeal before the High Court.
Held:
The Hon’ble High Court relying upon its own decision in the case of CCE vs. Salem Co-Operative Sugar Mills Ltd. 2014 (35) STR (450) (Mad) held that individual operator would also be covered within the meaning of expression ‘commercial concern’ as appeared u/s. 65(50b) of Finance Act.
Note: While deciding this case, the High Court appears to be under the impression that the Lakshminarayana Mining Co.’s (supra) and Kanaka Durga Agro’s case (supra) relied upon by the Tribunal dealt with the issue as to whether individual can be regarded as commercial concern or not? In Kanaka Durga’s case, the issue before the Tribunal was not whether individual is covered within the meaning of “commercial concern” but whether GTA includes individual truck operators/owners or on the agents thereof. It was submitted before the Tribunal that the aspect of agency being absent when a truck owner or operator gives a truck without an agent being go-between, there can be no tax. From the definition of the GTA and also the clarification given by the Finance Minister in the budget speech, Tribunal held that individual truck owners and operators are not covered within scope of section 65(50b). Kanaka Durga’s decision was followed in Lakshminarayana Mining Co.’s case which was also affirmed by the Karnataka HC in i.
In Salem Co-Operative Sugar Mills Ltd. (supra) case, Tribunal relied upon Kanaka Durga Agro Oil Products Pvt. Ltd.’ s case and remanded the matter back to adjudicating authority to verify whether services are received from individual owners. When Salem’s case came up before the Madras High Court in 2014 (35) STR 450 (Mad), the High Court neither overruled nor distinguished Kanaka Durga Agro & Lakshminarayana Mining (supra). Hence, to that extent it appears that reliance on Salem’s case for the purpose of present matter is misplaced.
