Can service tax on GTA services be paid through the transporter?

PJ/Case Law/2016-17/3356

Case:- GANESH FOUNDRY (RAJ.) Versus COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II

Citation:- 2016 (43) S.T.R. 308 (Tri. - Del.)

Brief Facts:-Appeal was filed against order-in-appeal dated 24-6-2009 which upheld the order-in-original dated 23-6-2009 in terms of which the appellants refund of Rs. 80,426 (Rs. 68,639/- service tax and Rs. 11,787/- interest) was rejected on the ground that the appellant was required to pay the said amount of service tax which it paid.

Appellant’s Contention:- The appellant contended that for the period 1-1-2005 to 31-10-2007 it paid service tax to the transporters which in turn would have paid it to the Government. Revenue during audit pointed out that in terms of Rule 2(1) (d) (v) of Service Tax Rules, 1994 the appellant was required to pay service tax on GTA service on the transport charges paid to the transporters and accordingly it paid the service tax of which the refund was sought on the ground that it was amounting to double payment.

Respondent’s Contention:- the respondent reiterated the submissions.

Reasoning of Judgment:- They considered the contentions of the appellant. It was not in dispute that in terms of Rule 2(1)(d)(v) of Service Tax Rules, 1994 appellant was required to pay the impugned amount of service tax which it paid. It was called principle of law that tax is to be remitted by the person who is legally required to pay the same. The claim of the appellant that it paid the said amount of service tax to the transporter, even if true, is of no avail because the liability of the appellant would be discharged only if it paid service tax to the Government account. Thus the plea of the appellant that it had paid service tax to the transporters and therefore should not have been required to pay the same to the Government and therefore the amount it paid to the Government should be refunded is legally untenable. Accordingly, they did not find any infirmity in the impugned order.

Decision:-Appeal disallowed.

Comment – The gist of the case is that the service tax on Goods Transport Agency Services has to be paid by assessee to Government only under reverse charge mechanism and not through the transporter. Paying through the transporter shall not reduce assessee’s liability to pay under Reverse charge Mechanism and therefore his contention that he has paid tax twice was not justified. It is well settled principle that tax has to be paid in accordance with the legal provisions and to the person who is legally permitted which is clearly Government under Rule 2(1)(d)(v) of Service Tax Rules, 1994. Hence refund applied by him was held to be inadmissible.

Prepared by- Alakh Bhandari

Comments

PJ/Case Law/2016-17/3356

Post a Comment

Query