Whether Service tax is applicable on service of transportation of goods through roads availed from the transport service provider during the course of trade and commerce of export.

PJ/Case Law/2018-2019/3478

Case:ORISSA CHROME EXPORT & MINING CO. LTD.
Citation: 2007 (217) E.L.T. 476 (A.A.R.)
Issue: Whether Service tax is applicable on service of transportation of goods through roads availed from the transport service provider during the course of trade and commerce of export.
Brief facts: The applicant M/s Orissa Chrome Export and Mining Company Limited, Bhubaneswar, Orissa is carrying on the activity of manufacture and export. An application for the issue mentioned above has been already made. It is stated in the application that the applicant is an existing exporter. However the jurisdictional Commissioner forwarded the comments to the application pointing that among other things the applicant has been issued a show cause notice with reference to the demand of service tax and the matter is still pending before Assistant Commissioner/Deputy Commissioner, (Service Tax Adjudication), Bhubaneswar. The applicant filed this application under 96C(1) of the Finance Act, 1994 (for short “Service Tax Act”) seeking an advance ruling of the Authority on the question as to whether Service tax is applicable on service of transportation of goods through roads availed from the transport service provider during the course of trade and commerce of export. However the authority is tentatively of the view that the said application is liable to be rejected on the following two grounds:

The question on which the applicant has sought an advance ruling relates to an “on going” activity/service: as has been admitted in applicant’s letter dated 3-10-2006.
It has been brought to the notice of the Authority by the concerned Commissioner, Central Excise, Customs & Service Tax, Bhubaneswar-I Commissionerate, Bhubaneswar that the issue raised in Question of the application is already pending before the Assistant Commissioner/Deputy Commissioner (Service Tax Adjudication), Bhubaneswar.

Appellant’s contention: The applicant filed its reply stating that the objects and reasons of advance ruling with respect to a particular provision of the Act and the relevant provision of the Act have come very recently, the applicant which was in the business has efficiently approached the Authority to obtain an advance ruling on the Subject. Even now it is an ongoing activity. It has been stated that the matter which is pending before the Commissioner, Central Excise, Customs & Service Tax, Bhubaneswar is with respect to an assessment and not with respect to substantial question of law and that the subject matter before the Authority is in relation to a substantial question of law. That the matter before the Authority is different from the matter pending before the Commissioner, Central Excise, Customs & Service Tax, Bhubaneswar. Mr. Biswajit Das, Learned Counsel appearing for the applicant submits that no doubt the activity which is being carried on in respect of which advance ruling is sought, is an ongoing activity but the moment this activity was brought within the ambit of the Service Tax Act, the applicant has immediately approached the Authority. Therefore, it cannot be treated as an ongoing activity for the purposes of the Act.
Respondent’s Contention and Judgement: The authority has undergone a detailed study of the facts related to the case. It further suggests that before making any decision it becomes important to study the Provision of the Section 96A(a) of the Service Tax Act. The Mentioned Provision Reads as follows:
“Advance ruling” means the determination, by the Authority, of a question of law or fact specified in the application regarding the liability to pay service tax in relation to a service proposed to be provided, by the applicant.”
The definition of advance ruling, referred above, makes it abundantly clear that it is concerned with determination of the question of law or fact in relation to service which is proposed to be provided by the applicant. In as much as in this case the activity in respect of which an advance ruling is sought, is not the one which is proposed to be provided but is an ongoing activity, the application is not maintainable. The Authority has taken the same view in case of M/s McDonald’s India Pvt. Ltd., Mumbai - 2006 (3) S.T.R. 245(A.A.R.) = 2005 (185) E.L.T. 31(A.A.R.) Order No. AAR/44/103/2003 dated 23-2-2004, M/s Om Construction, Jabalpur - 2006 (3) S.T.R. 558(A.A.R.) Order No. AAR/01 (ST)/2005 dated 6-1-2005 and M/s IJM (India) Infrastructure Limited, New Delhi - Order No. AAR/05(ST)/2006 dated 9-11-2006 [2007 (5) S.T.R. 314(A.A.R.)].
Decision: The application has been rejected.
Comment: The Marrow of the case is that the decision to be given by the Advance Authority for a question of law or fact specified in the application regarding the liability to pay service tax must be in relation to a service proposed to be provided. It should not be an ongoing activity.
Prepared by: Adit Gupta

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PJ/Case Law/2018-2019/3478

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