GTA providers are not liable where specified recipients bear tax under reverse charge.

The Appellant, a private limited company operating as a Goods Transport Agency (GTA) and issuing consignment notes, appealed against the Commissioner (Appeals)’ order concerning service tax for FY 2016–17.

The original demand was Rs. 12,46,174, later modified by the Commissioner (Appeals) to Rs. 11,96,364; an equal penalty under Section 78 and penalties under Sections 77(1)(a), 77(1)(c) and 77(2) of the Finance Act, 1994, were upheld.

Before the Tribunal, the Appellant claimed exemptions for transporting agricultural produce and hiring vehicles to other GTAs, contended that service recipients were liable under the reverse charge mechanism, and claimed threshold exemption and GTA abatement.

Whether receipts from transporting potatoes, an agricultural produce, were exempt from service tax.

Whether service tax on GTA services provided to specified recipients, including body corporates, was payable by the Appellant or by the recipients under the reverse charge mechanism.

Whether receipts from hiring vehicles to other GTAs were exempt and whether the Appellant was entitled to the threshold exemption and GTA abatement when calculating its taxable value.

Whether the demand and penalties should be sustained in light of the revised computation.

The Tribunal applied Entry 21(a) of Notification No. 25/2012-ST, which exempts GTA services for transportation of agricultural produce, and Entry 22 of that Notification, which it found exempted the relevant vehicle-hiring services.

Notification No. 30/2012-ST places liability for specified GTA services on the service recipient under reverse charge; the Tribunal held that the Appellant, as provider, was not liable where the recipients fell within the specified categories, including body corporates.

The Tribunal also considered the Rs. 10 lakh threshold exemption under Notification No. 33/2012-ST, the 70% abatement under Notification No. 26/2012-ST for GTA services, and the service-tax levy under Section 66B of the Finance Act, 1994.

It addressed penalties under Sections 78, 77(1)(a), 77(1)(c) and 77(2) of that Act.

The Tribunal accepted that Rs. 47,36,659 was received for transporting potatoes and treated that amount as exempt agricultural-produce transportation.

It held that service tax on qualifying GTA services was payable by the specified recipients, relying on Form 26AS as evidence that the recipients were body corporates.

It also treated Rs. 21,75,117 received for providing vehicles on hire to other GTAs as exempt under Entry 22.

Applying the claimed Rs. 10 lakh threshold exemption and 70% GTA abatement to the remaining receipts, the Appellant calculated service tax of Rs. 17,823; the Tribunal directed verification of the figures before modifying the demand to that amount.

The service-tax demand was modified to Rs. 17,823, subject to verification, with applicable interest to be addressed through appropriation from the pre-deposit as directed.

The penalties under Sections 78, 77(1)(a), 77(1)(c) and 77(2) were set aside.