Goods Transport Agency (“GTA”) has been defined to mean any person who provides service to a person in relation to transport of goods by road and issues consignment note, by whatever name called. In addition to transportation services, GTA also provides various ancillary services such as loading/ unloading, packing/unpacking, transhipment, temporary storage etc., which are provided in the course of transportation of goods by road.
The All India Transport Welfare Association (AITWA) has represented regarding the difficulties being faced by the GTAs in respect of Service tax levy on the services of goods transport. Doubts have been raised by the All India Motor Transport Congress (AIMTC) regarding treatment given to various services provided by GTAs in the course of transportation of goods by road. The matter has now been clarified by the Central Board of Excise and Customs (“CBEC” or “the Board”).
The CBEC vide Circular No. 186/5/2015-ST datedOctober 5, 2015 has clarified the following:
- Various services provided by GTA in transportation of goods by road shall be treated as part of GTA service - The services provided by GTA is a composite service which may include various ancillary services such as loading/ unloading, packing/unpacking, transhipment, temporary storage etc., which are provided in the course of transportation of goods by road. These ancillary services may be provided by GTA himself or may be sub-contracted by the GTA.In either case, for the service provided, GTA issues a consignment note and the invoice issued by the GTA for providing the said service includes the value of ancillary services provided in the course of transportation of goods by road. These services are not provided as independent activities but are the means for successful provision of the principal service, namely, the transportation of goods by road.
- Single composite service need not be broken into its components and considered as separate services - A single composite service need not be broken into its components and considered as constituting separate services, if it is provided as such in the ordinary course of business. Thus, a composite service, even if it consists of more than one service, should be treated as a single service based on the main or principal service. While taking a view, both the form and substance of the transaction are to be taken into account. The guiding principle is to identify the essential features of the transaction.
- Abatement of 70% available to the entire composite services - The interpretation of specified descriptions of services in such cases shall be based on the principle of interpretation enumerated in Section 66F of the Finance Act, 1994 (“the Finance Act”). Thus, if ancillary services are provided in the course of transportation of goods by road and the charges for such services are included in the invoice issued by the GTA, and not by any other person, such services would form part of GTA service, and, therefore, the abatement of 70%, presently applicable to GTA service (Rate of abatement was 75% for the period prior to April 1, 2015), would be available on it.
- 2 important conditions for applicability of Abatement Notification - It is also clarified that transportation of goods by road by a GTA, in cases where GTA undertakes to reach/deliver the goods at destination within a stipulated time, should be considered as ‘services of goods transport agency in relation to transportation of goods' for the purpose of Notification No. 26/2012-ST dated June 20, 2012 (S. No. 7), so long as (a) the entire transportation of goods is by road; and (b) the GTA issues a consignment note, by whatever name called.
Other IDT Digests under the Service Tax and Excise is as follows:
A. Service Tax:
- Service Tax payment for the month of September, 2015 is due for payment on October 6, 2015 for assesses including Individual, Proprietary Firm, Partnership Firm or LLP. It is mandatory for all assesses w.e.f. October 1, 2014, to pay Service tax dues through internet banking (e-payment) (In case the assessee wants to use any mode other than internet banking, a specific permission may be taken from the Assistant Commissioner/ Deputy Commissioner).
- Rate of Interest under Section 75 of the Finance Act has been revised w.e.f. October 1, 2014 (Prior to changes brought in vide the Finance (No. 2) Act, 2014, the rate of interest was fixed at 18% simple interest throughout the period of delay,to be calculated on daily basis):
- Extent of delaySimple interest rate per annumUp to six months18%More than six months and up to one year18% for first six months and 24% for the period of delay beyond six months.More than one year18% for first six months, 24% for second six months and 30% for the period of delay beyond one year.
Note: Relaxation of 3% is provided to a service provider, whose value of taxable services provided in a financial year does not exceed Rs. 60 Lakhs during any of the financial years covered by the notice or during the last preceding financial year, as the case may be.
- ST 3 Return – Half Yearly Service Tax Return (ST-3) for the period April – September 2015 is due on October 25, 2015. The Excel Utility can be downloaded from www.aces.gov.in/downloads.
B. Central Excise
- Excise payment for the month of September, 2015 is due for payment on October 6, 2015 for assesses including SSIs. It is mandatory for all assesses w.e.f. October 1, 2014, to pay their dues through internet banking (e-payment) (In case the assessee wants to use any mode other than internet banking, a specific permission may be taken from the Assistant Commissioner/ Deputy Commissioner).
- Excise Returns – Last date for filing of ER 1, ER 2 and ER 6 is October 10, 2015.
C. Circulars/ Notifications
- Clarification regarding prevalence of Court decisions over Circular and instructions
The CBEC vide Circular No. 1006/13/2015-CX dated September 21, 2015 has clarified that Board Circulars contrary to the judgements of Hon'ble Supreme Court become non-est in law and should not be followed. The above direction would also apply to the judgements of Hon'ble High Court where Board has decided that no appeal would be filed on merit. However where appeal has been filed by revenue against the High Court's order, pending adjudication, and matters would be transferred to the Call-Book and such appeals would be kept alive.
- Export of manufactured final product under bond without payment of Excise duty under Rule 19 of the Central Excise Rules, 2002
The CBEC vide Notification No. 20/2015-C.E.(N.T.) dated September 24, 2015 has notified the conditions, safeguards and procedures for supply of items like tags, labels, printed bags, stickers, belts, buttons and hangers produced or manufactured in an Export Oriented Undertaking and cleared without payment of duty to a Domestic Tariff Area unit in terms of Para 6.09 (g) of Foreign Trade Policy, 2015-20, for the purpose of their exportation out of India.
D. Important Case Laws in Excise:
Andaman Timber Industries Vs. Commissioner of Central Excise, Kolkata-II) [(2015) 62 taxmann.com 3 (SC) SUPREME COURT OF INDIA]
Not allowing assessee to cross-examine statements of witnesses, which were made basis of demand, is a serious flaw which makes order nullity, as it amounts to violation of principles of natural justice
The Assessee, a manufacturer of plywood, was selling the same mainly from various depots and in some cases, on ex-factory basis also. The Assessee paid duty on depot sales based on ex-factory price. The Department found that ex-factory price remained static while depot prices were increasing. Hence, based on statements of two buyers, the department raised demand of duty taking depot prices as basis for valuation. The Assessee sought cross-examination of witnesses and argued that ex-factory price must be taken. The Tribunal held that (a) ex-factory sales was hardly 2%; (b) Assessee could not explain why depot prices were increasing and ex-factory prices remained static; and (c) cross-examination was not necessary, as same would not bring new material when it was for assessees to explain their price difference.
It was held that by not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority, it was specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority.
Commissioner of Central Excise, Delhi-III Vs. Hitkari Fibres Ltd. [(2015) 61 taxmann.com 419 (SC), SUPREME COURT OF INDIA]
Price-escalation which was not contemplated at or before time of removal, cannot form part of transaction value especially when there is no allegation of understatement of value - Duty is payable at place, price and time of clearance of goods
The Assessee cleared non-woven carpets to Maruti Udyog Limited (“Maruti”), paying duty based on invoice price. On inquiry from Maruti, the Department found that assessee had received additional amount on account of price escalation and therefore, raised demand of duty thereon. The Tribunal held that duty is payable at 'price' at time/ place of removal and since price escalation was not contemplated/ anticipated in sale contract/ agreement or purchase order, the same could not be added to value.
The Hon’ble Supreme Court held that the duty is payable at place, price and time of clearance of goods. The Revenue could not find out from Maruti whether (a) under what circumstances such price escalation was given, (b) whether price was understated or depressed at time of clearance of goods and additional amount was received subsequently, by a suspicious kind of arrangement. In the absence of any such facts, aforesaid additional amount received at a subsequent stage cannot be added to arrive at transaction value.