Services provided by GTA under the Reverse Charge Mechanism to Registered Factories subject to Service Tax: CESTAT
Under the reverse charge mechanism (RCM), the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi bench
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Services provided by GTA under the Reverse Charge Mechanism to Registered Factories subject to Service Tax: CESTAT Under the reverse charge mechanism (RCM), the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi bench has held that GTA services provided to registered factories will be subject to service tax. A department order was passed against the appellants for the...
Services provided by GTA under the Reverse Charge Mechanism to Registered Factories subject to Service Tax: CESTAT
Under the reverse charge mechanism (RCM), the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi bench has held that GTA services provided to registered factories will be subject to service tax.
A department order was passed against the appellants for the GTA services provided by them to the proprietorship concern. On the basis that since the proprietorship concern was the intended recipient of GTA services provided by the appellant, the Reverse Charge Mechanism was not applicable and the appellant must pay service tax.
Such proprietorship concerns, as per the appellant, are factories under the Factories Act/ Rules. Therefore as per section 68(2) of the Act r/w Notification 30/2012-ST on 20th June, 2012, the recipient of the GTA services, who made the payment of freight, was responsible for paying the total service tax.
Judicial member, Mr. Ajay Sharma, allowed the appeal on the ground that the certificates issued by the respective state governments, verifying that the proprietary concerns are registered as factories, were also submitted to the authorities concerned and before me too.
As a result of reading the same, it is inevitable that the proprietary concern to which GTA services were provided by the appellant was an authorized dealer of Piggio Auto and was registered as a factory. Hence in accordance with Section 68(2) ibid in conjunction with the Notification (supra), those businesses are liable to pay service tax under reverse charge mechanism. Accordingly, the demand for the period April 2016 to June 2017 is also likely to be set aside.
Though the appellant has also raised the issue of threshold exemption under notification no.33/2012-ST on 20th June, 2012, the Tribunal has held that since the proprietary concerned is registered as factories, they must pay service tax under reverse charge mechanisms, so it will not be considered as the threshold exemption issue."