Customs, Excise and Service Tax Appellate Tribunal

Bharat Swabhiman (Nyas) Vs. Commissioner Customs, Central Excise & Service Tax

MANU/CE/0031/2022

27.01.2022

Service Tax

Service tax can be levied only if consignment notes are issued

Present appeal has been filed to assail the order passed by the Commissioner, Customs, Central Excise & Service Tax, Commissionerate, confirming the demand of service tax with interest and penalty. The issue that arises for consideration is regarding the demand of service tax on the donations received by the Appellant from its members and on freight charges paid by the Appellant under the reverse charge mechanism.

The Appellant submitted that, the demand of service tax on membership donation is not sustainable as the activities of the Appellant are exempt under Notification dated 26th September, 2016 from 1st July, 2012 to 20th October, 2015 and under Notification dated 20th June, 2012 w.e.f. 21st October, 2015.

The Appellant is registered under Section 12AA of the Income Tax Act, 1961 and the education and training in yoga provided by the Appellant is towards the activity of advancement of yoga. Thus, as both the conditions are satisfied by the appellant, the membership donations collected by the Appellant would be exempt from payment of service tax for the period from 1st July, 2012 to 20th October, 2015.

The Appellant is also entitled to exemption from payment of service tax under the Notification dated 20th June, 2012 w.e.f. 21st October, 2015. It is, therefore, clear that the twin conditions that the entity must be registered under Section 12AA of the Income Tax Act and activities must be carried out by way of charitable activities stand satisfied.

The next issue that remains to be decided is whether the Appellant is liable to pay service tax on the freight amount paid by it on a reverse charge mechanism.

'Goods transport agency' service has been defined in Section 65(26) of the Finance Act,1994 to mean any person who provides service in relation to transport of goods by road and issues consignment notes, by whatever name called. In the present case, consignment notes have not been issued and so the activities cannot be said to be covered under 'goods transport agency' services.

It would be useful to refer to the decision of the Tribunal in Bhoramdeo Sahakari Shakhar Utpadam Karkhana vs. Commissioner of Customs, Central Excise & Service Tax, Raipur, wherein it has been held that, service tax can be levied only if consignment notes are issued. Thus, service tax liability could not have been fastened on the Appellant under the reserve charge mechanism. The order passed by the Commissioner, therefore, cannot be sustained. It is, accordingly, set aside. Appeal allowed.

Tags : Demand Confirmation Legality

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