2026-VIL-972-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax - GTA Service, Sub-contractor liability under Reverse Charge Mechanism – appellant engaged in steamer agency and port logistics arranged transportation of cargo on behalf of a principal contractor and paid freight charges to transporters without discharging service tax – Dept initiated proceedings invoking the extended period, contending that the company was a person liable to pay freight under Rule 2(1)(d)(v) of the Service Tax Rules, 1994, and therefore liable to discharge service tax under the RCM applicable to GTA services - Whether a company that arranges vehicles and coordinates cargo movement on behalf of a principal contractor can be treated as an independent GTA and liable to discharge service tax under the RCM when the principal contractor has already discharged service tax on the transportation component – HELD - Mere routing of freight payments through a sub-contractor or temporary handling of freight disbursements cannot automatically render it liable as a person liable to pay freight under Rule 2(1)(d)(v), particularly when documentary evidence consistently establish that the company merely incurred expenditure in a representative capacity on behalf of the principal contractor – Under Section 65(50b) of the Finance Act, 1994, issuance of consignment note is an essential statutory attribute of a Goods Transport Agency, and since the appellant never issued consignment notes in its own name and the consignment notes were issued only by the principal contractor which dealt with customers and discharged service tax on the transportation component, the foundational requirement for levy under GTA service itself is absent – Further, once the Dept was informed about the sub-contracting arrangement and discharge of service tax by the principal contractor, it was duty-bound to verify the records of the principal contractor before proceeding against the company, and failure to conduct such verification cannot be used against the assessee in a revenue-neutral situation - The impugned demand is set aside and the appeal is allowed
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