The liability for Service Tax under the Reverse Charge Mechanism for Goods Transport Agency (GTA) services requires the issuance of a valid Consignment Note; furthermore, mere audit-based discovery does not constitute willful suppression to invoke the extended period of limitation, especially against a Government undertaking.

RACHNA GUPTA

The appellant herein is a distribution licensee for developing and maintaining the distribution system to supply electricity in the jurisdictional area and is registered for providing taxable services under ‘Technical Inspection and Certification Agency Service’. The appellant was also registered to discharge the service tax liability under reverse charge mechanism for providing taxable service of “Works Contract Service” “Legal Consultancy” and other taxable services. Vide the internal audit report No. 177/2020-21 dated 18.12.2020, it was observed that the appellant for the purpose of electricity supply was required to procure material used for creation of capital assets/infrastructure and further operation and maintenance of its existing distribution system. The appellant was placing order for transportation of material/PCC Poles procured/purchased and was paying freight on such transportation of charges. Observing that the invoice received by the appellants had all required details of consignment note the appellant was alleged liable to pay service tax under Reverse Charge Mechanism¹1. RCM for receiving ‘Goods Transport Agency Service’. The matter was investigated and details were called from the appellant vide letter dated 30 December, 2020 requiring the copy of various purchased orders placed to various firms during October 2014 to June 2017. It was observed from the details provided by the appellant that a payment of Rs. 48.30 crores has been made by the appellant on account of freight paid for transportation of various types of PCC Poles/purchased material on which the appellant was liable to pay service tax under reverse charge mechanism for an amount of Rs. 1,81,82,419/-.

2. Based on the said observations that the show cause notice bearing No. 538/20/622 dated 31.12.2020 was served upon the appellant proposing the demand of aforesaid amount of service tax under RCM along with the interest at the applicable rate and the imposition of appropriate penalties. Extended period of limitation got invoked while alleging willful suppression of facts by the appellant from the department, with intent to evade the payment of the service tax. The proposal was confirmed vide order-in-original No. 4/2021-22 dated 30 June 2021. Appeal against the said order has been dismissed by Commissioner (Appeals) vide order-in-appeal No. 327/2021 dated 14.10.2021. Being aggrieved, the appellant is before this Tribunal.

3. We have heard Shri B.L. Narasimhan, learned counsel for the appellant assisted by Shri Kunal Aggarwal and Shri Aejaz Ahmad, learned authorized representative for the department.

4. Learned counsel for the appellant has submitted that in terms of the purchase order the PCC Pole supplier was responsible for sale of PC Poles on ex-work price (inclusive of central excise duty, VAT & loading charges). It was agreed that if poles supplier will arrange the transportation, the charges for the same shall be separately defined in the purchase order. Various purchase orders were produced before the departmental authorities showing that the pole supplier had arranged the transportation. It is further submitted that the pole supplier used to engage transporter/goods transport agencies, however, the payment used to be the differently fixed amount in the purchase order itself. Hence, the appellant was not privy to the arrangement between PCC pole suppliers and the GTAs. The liability viz-a-viz the amount paid as transportation charges by the appellant to the PCC pole suppliers is wrongly alleged as consideration paid by appellant for receiving goods transport agency services. Apparently and ad