By CA Puloma Dalal, CA Jayesh Gogri,CA Mandar Telang, Chartered Accountants
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If, commission agent, who arranges for transportation of goods, pays
tax on gTa services and claims reimbursement thereof from its customer, input
tax credit of tax paid on gTa services is not allowable in terms of CCR, 2004.
Facts
The appellant, a commission agent,
handled receipt of goods from principal and transportation to the buyers. The
appellant discharged service tax liability as a provider of “goods transport
agency” and also recovered the said tax paid towards Gta services from the
buyers of goods who were contractually required to reimburse freight charges
along with taxes paid thereon to the appellant. While discharging service tax
liability on his commission income, the appellant claimed CENVAT credit of tax
paid on Gta services. Revenue denied availment of CENVAT credit on the ground
that for Gta services, the appellant was acting only as agent of the buyers and
hence, he cannot be said to be discharging tax on Gta services on its own
account and accordingly, is not eligible for CENVAT claim.
Held
The Hon’ble Mumbai Tribunal
affirmed the denial of CENVAT credit by holding that the activity of
“transportation of goods” as undertaken by the appellant is same as other
agency functions rendered by the appellant on reimbursement basis and hence, it
does not constitute performance of taxable service by appellant, so as to
entitle the appellant to claim CENVAT credit thereof.
As regards imposition of penalty
u/s. 78 of the finance act, 1994 for period covered by second show cause
notice, the hon’ble tribunal Held that when second show cause notice (SCN) is
issued within few months after first SCN is issued, it is not open for revenue
to contend suppression of Facts and resultantly, in absence of clear evidence
of suppression with intention to evade service tax payment, levy of penalty
u/s.78 in relation to second period of demand is not proper.
