Tribunal finds no liability under Goods Transport Agency, Management or Business Consultant, and Scientific Consultancy Services; Appeal Allowed
The Customs Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad Regional Bench, has ruled in favor of M/s Mars International India Pvt Ltd., overturning significant service tax demands imposed by the Commissioner of Central Tax Hyderabad-II. The tribunal, comprising Mr. A.K. Jyotishi (Technical Member) and Mr. Angad Prasad (Judicial Member), delivered its decision on November 21, 2025, allowing the appeal filed by Mars International against the order dated May 30, 2014.
The appeal challenged the service tax liability under three categories: Goods Transport Agency (GTA) services, Management or Business Consultant Services (MBCS), and Scientific and Technical Consultancy Services. The tribunal's judgment found that the demands were unsustainable due to various reasons, including the lack of a service provider-recipient relationship and misclassification in the Show Cause Notice (SCN).
Regarding the GTA services, the tribunal noted that Mars International did not avail services from a Goods Transport Agency, as no consignment notes were issued. The tribunal held that service tax was not payable under Section 65(105)(zzp) of the Finance Act, 1994, as the appellant merely reimbursed local delivery expenses to distributors and agents. This decision was in line with precedents that clarified the non-taxability of such reimbursements.
In the case of MBCS, the tribunal found that the categorization was not proposed in the SCN, thereby rendering the demand unsustainable. The tribunal referenced the Supreme Court's ruling in CCE, ST v. Northern Operating Systems Pvt Ltd., emphasizing the importance of precise categorization in SCNs.
The tribunal also dismissed the demand under Scientific and Technical Consultancy Services, as there was no evidence of a service provider-recipient relationship. The cost-sharing arrangement among group entities did not constitute taxable services, as per Section 65(105)(za) of the Finance Act.
Additionally, the tribunal rejected the invocation of the extended period of limitation, citing the absence of suppression of facts by Mars International. It noted that the appellant's bona fide belief and the lack of specific fields in ST-3 returns negated any allegations of suppression.
The tribunal's decision effectively sets aside the penalties imposed under Section 78 of the Finance Act, 1994, concluding that the demands were not tenable either on merit or limitation.
Bottom Line:
Service Tax - Liability under Goods Transport Agency (GTA), Management or Business Consultant Services (MBCS), and Scientific and Technical Consultancy Services - Demand confirmed by Commissioner challenged - Tribunal held that no Service Tax is payable under GTA as appellant did not avail services of GTA or issue consignment notes - Demand under MBCS not sustainable as categorization was not proposed in the Show Cause Notice - Scientific and Technical Consultancy Services not taxable as no service provider-recipient relationship existed - Extended period of limitation not invokable due to absence of suppression of facts - Appeal allowed.
Statutory provision(s): Section 65(105)(zzp), Section 73(2), Section 75, Section 78, Section 65(65), Section 65(68), Section 65(105)(za), Section 65b(26), Section 67 of the Finance Act, 1994; Notification No. 34/2004, Notification No. 36/2004.
