Order date – 08 August 2022

Facts – 

• The Appellant, M/s Prakash Road Lines, are engaged in transportation of goods from various siding to Nepal. 
• On going through the records like Income Tax Returns, Income & Expenditure Account, Profit and Loss Account and Balance sheet of the appellant for the years 2007-08 to 2011-12, it appeared to the department that the appellant had rendered the taxable services under the categories ‘Goods Transport Agency Service’; ‘Business Auxiliary Service’; ‘Manpower Recruitment Service or Supply Service’ etc and that the appellant had not discharged the applicable service tax.
• A show cause notice dated 31.03.2013 was issued to the appellant proposing to recover service tax of Rs.1,42,82,025/- along with penalty under section 77 and section 78 of Finance Act, 1994. 
• Aggrieved the appellant filed an appeal.

Issue – 

• Whether the activity undertaken by the appellant are covered under category of transport of goods by road service in terms of Section 65 (105) of Finance Act, 1994? 
• Whether the appellants have rendered ‘ Business Auxiliary Service under section 65(105) (zzb) of Finance Act, 1994 in respect of the commission earned from trucks they hired on behalf of the Nepal parties at a commission? 
• Whether it was correct to allege rendering of ‘Manpower Recruitment Services’ in the show cause notice and confirm the same under ‘Goods Transport Agency Service’ in the Order-in-Original?

Order – 

• The Tribunal observed that the Nepali Traders engaged the trucks from the appellant and others for transporting their own goods for transportation from Gorakhpur to different places in Nepal. Hence, the consignor and consignees are same. Challans are not consignment notes as they have not been issued against the receipt of goods. The said challans do contain details like truck number, driver name and particulars of the goods. Further, Appellant referred to the speech of Hon’ble Finance Minister on 08.07.2004 stating that there has been no intention of law makers to levy service tax on services provided by individual truck owner operators. Therefore, the first issue has been answered in negative.
• Further, the impugned order has seriously erred in confirming the duty liability simply on the basis of the figures obtained from documents like Income Tax Returns etc. without causing a bare minimum enquiry with all the concerned parties. Moreover, the taxability of the appellant when they received consideration from the customers residing in Nepal, on reverse charge mechanism is not established.
• It was further held that the Department was confused where issuing show cause notice. In so far as the ‘loading, unloading charges’ are concerned, the show cause notice considered them receipts for services rendered as ‘Manpower Supply Agency’. The impugned order treats them to be for the ‘Goods Transport Agency Services’. Therefore the impugned order has travelled beyond the show cause notice.
• Also, it was observed that the department has simply confirmed the Service tax liability against the appellant without going into the details of arrangements between the appellant and his clients. The appellant’s contention on the receipts being within exemption limits, over the years, is acceptable. Therefore the demand confirmed is not sustainable. Accordingly, the penalties imposed are also not sustainable. 
• The appeal was allowed.