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2019 (9) TMI 1419 - AT - Service TaxClassification of services - activity of transportation of RMC - Supply of tangible goods Service or not - according to Revenue it is supply of transit mixer by appellant - case of appellant is that service tax on STG would get attracted when the supply of tangible goods is for the use of a service recipient but in the instant case the work orders did not relate to supply of transit mixtures but related to transportation of RMC. HELD THAT - The Commissioner observed that the appellant had given on hire vehicles to the service recipient for use in the transportation of RMC from its plant to the premises of the customer though the right to possession and effective control over the vehicles remained with the appellant and it had to deploy manpower to operate and control the vehicles - This conclusion drawn by the Commissioner is a patently wrong understanding of the conditions of the work order. The appellant did not give on hire the vehicles. Even the subject matter of the work order is for transportation of Ready Mix Concrete in vehicle/vehicles from our Jaipur 1TD Ready Mix Plant at Jaipur . The contract that has been awarded is also for transportation of Ready Mix Concrete from the plant of the appellant on the terms and conditions mentioned in the work order. Condition No. 1 of the work order is that the appellant shall load RMC in the vehicle and transport the same to the required destination and unload it at the customer s site. Merely because the work order requires the appellant to deploy a fleet of 6M3 capacity vehicles for transport of 9000 M3 of RMC every month does not mean that the appellant has given vehicles on hire. The work order only requires the appellant to ensure that it has available a fleet of vehicles adequate enough to transport a particular quantity of RMC every month. Even the transportation charges are under two heads. The first is payment of a certain amount for the quantity of RMC transported during a calendar month and a certain amount per km for the distance travelled for transportation of RMC during the month. The Commissioner failed to appreciate that under the work order the appellant was required to transport RMC for which purpose the appellant was required to load RMC in the vehicles of the appellant and transport the same to the required destination and unload it. The requirement under the work order that the appellant should have a fleet of vehicles adequate enough to transport 9000 M3 RMC every month would not mean that the appellant had given the vehicle on hire. The Commissioner was required to examine all the conditions of the work order but the finding is based on an assumption that vehicle was hired for transportation of RMC - Commissioner also fell into an error in assuming that if a minimum load of 745 cum per month per vehicle is not loaded then too the appellant would be entitled to payment on this minimum quantity to conclude that in this manner payment would also be made for goods that have not been transported and no consignment note would have been issued for the same. The appellant has been rendering GTA service by transporting RMC from one place to another as per the directions of the service recipient. The finding to the contrary recorded in the impugned order by the Commissioner that the appellant was not performing GTA service but was performing STG service cannot be sustained. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Classification of the service provided by the appellant: Whether it falls under "Goods Transport Agency (GTA)" or "Supply of Tangible Goods (STG)". 2. Applicability of Service Tax under Section 65(105)(zzzzj) of the Finance Act, 1994. 3. Issuance and relevance of consignment notes. 4. Invocation of the extended period of limitation. Issue-wise Detailed Analysis: 1. Classification of the Service: GTA vs. STG The appellant claimed it was engaged in the transportation of Ready Mix Concrete (RMC) using transit mixers, issuing consignment notes, and raising periodic bills for transportation charges. The appellant argued that the service provided was a "Goods Transport Agency (GTA)" service, with the service recipient discharging Service Tax liability on a reverse charge basis. The Department, however, contended that the appellant was providing "Supply of Tangible Goods (STG)" service, taxable under Section 65(105)(zzzzj) of the Finance Act, 1994, as the appellant supplied tangible goods, namely transit mixers, to its customers. 2. Applicability of Service Tax under Section 65(105)(zzzzj) The Commissioner concluded that the appellant's agreement was for deploying a fleet of vehicles, not merely for transportation, and thus classified the service under STG. The Commissioner noted that the appellant retained possession and control over the vehicles, deploying drivers and cleaners, and maintaining the vehicles. However, the Tribunal found this conclusion to be a misinterpretation of the work order terms, which explicitly required the appellant to load, transport, and unload RMC, not to hire out vehicles. 3. Issuance and Relevance of Consignment Notes The appellant issued consignment notes for each trip, essential for classifying the service under GTA. The Commissioner argued that the assurance of a minimum load per month indicated a supply of tangible goods rather than transportation. The Tribunal, however, emphasized that the issuance of consignment notes and the detailed terms of the work orders supported the classification of the service as GTA. The Tribunal noted that the consignment notes issued by the appellant contained all necessary particulars as per Rule 4B of the Service Tax Rules, 1994. 4. Invocation of the Extended Period of Limitation The appellant contended that the extended period of limitation could not be invoked. The Tribunal did not delve deeply into this issue, as the primary classification issue was resolved in favor of the appellant, negating the need to address the limitation period extensively. Conclusion: The Tribunal concluded that the appellant was indeed rendering GTA service by transporting RMC and that the service was wrongly classified as STG by the Commissioner. The impugned order dated 15 January, 2016, was set aside, and the appeal was allowed. The Tribunal's decision focused on the clear terms of the work orders, the issuance of consignment notes, and the nature of the service provided, which aligned with the definition and requirements of GTA service.
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