The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has quashed the service tax demand under Reverse Charge Mechanism (RCM) on roads transport agency services on individual truck owners services.
The bench of Justice Dilip Gupta (President) and P. V. Subba Rao (Technical Member) has observed that in order for an organisation to be a goods transport agency it must issue consignment notes. It is a well settled legal position that individual truck owners who do not issue consignment notes are not covered by the definition of goods transport agency and the services rendered by them are not exigible to service tax.
The appellant/assessee, M/s Aaditya Constructions1 is a partnership firm engaged in providing construction services in respect of commercial or industrial buildings, civil structures and works contracts and was a recipient of “transportation of goods by road” services. It had registered with the service tax department and had been filing service tax returns.
Intelligence gathered by the department indicated that the appellant had not assessed and paid service tax correctly and that though the appellant had rendered services during 2008-09, it had obtained the service tax registration only on 19.03.2010.
After scrutiny of the audit reports submitted by the appellant, its balance sheets, etc., a Show Cause Notice was issued to the appellant proposing demand of service tax for the period 2008-09 to 2011-12 invoking the extended period of limitation under section 73 of the Finance Act 1994. It was also proposed in the SCN to impose penalties under section 76, 77, 78 of the Finance Act.
Section 65(105) (zzzza) specifically excludes “works contracts in respect of roads” as well as the “works contracts in respect of dams”. Therefore, the demand of service tax either on the construction of roads or on the tiling of the reservoir for dams cannot be sustained.
The tribunal held that the demand of service tax under reverse charge mechanism on roads transport agency services on the services rendered by the individual truck owners also cannot be sustained. Since the demand of service tax cannot be sustained, the demand of interest and penalty also need to be set aside.
Case Details
Case Title: M/S Aaditya Constructions Versus Principal Commissioner Of CGST-Raipur Chhattisgarh
Case No.: SERVICE TAX APPEAL NO. 50915 OF 2018
Date: 22/01/2025
Counsel For Appellant: B.L. Narasimhan and Ms. Daliya Singh
Counsel For Respondent: Manoj Kumar
