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2016 (2) TMI 546 - CESTAT NEW DELHI

2016 (2) TMI 546 - CESTAT NEW DELHI - 2016 (41) S.T.R. 651 (Tri. - Del.) - Classification of services - providing services relating to transportation of light Commercial Motor Vehicles & Multi Utility Vehicle, manufactured by M/s Force Motors Ltd. by way of getting them driven by skilled drivers - Support Service for Business or Commerce (BSS) and / or Business Auxiliary Service (BAS) - Held that:- It is seen from the agreement that the appellant was not providing skilled drivers to the service .....

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ty as per the agreement. Its responsibility as per the said agreement was not merely executory but required proper management supervision and coordination of various aspects relating to fulfillment of its responsibilities as per the said agreement. Therefore the services rendered clearly fell under the scope of managing distribution and logistics.

None of the limbs of BAS covers the impunged activity - the services rendered by the appellant were clearly, unambiguously and fully covere .....

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hs. - Once suppression is established as it has been in the present case , Revenue gets a period of 5 years to issue show cause notice as per the proviso to Section 73(1) ibid.

Demand pertaining to the period 1.5.06 to 31.12.07 along with interest and penalty under Section 78 is upheld. - Decided against the assessee. - Service Tax Appeal Nos. 406 of 2009 & 57963 of 2013 - Final Order No. ST/A/52962-52963/2015-CU(DB) - Dated:- 10-9-2015 - G Raghuram, President And R K Singh, Member (T .....

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- + interest 35,34,127/- 45,16,329/- & 2000/- The facts of the case briefly stated are as under: The appellant is engaged in providing services relating to transportation of light Commercial Motor Vehicles & Multi Utility Vehicle, manufactured by M/s Force Motors Ltd. by way of getting them driven by skilled drivers. The primary adjudicating authority held that upto 30.4,2006 the services rendered were classifiable under Business Auxiliary Service (BAS) [Section 65((105)(19}] of the Fina .....

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who drove the vehicles to various destinations (depot or dealer's premises) as directed by the service recipient (M/s Force Motor Ltd.) These services can at best be possibly covered under GTA service or manpower recruitment or supply service, (ii) It was not managing any distribution or logistics, (iii) The extended period is not invokable there was no willful misstatement or suppression on its part and Revenue itself was confused whether the service was under BAS or BSS and. (iv) In respe .....

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ded by the lower adjudicating authorities. 3. Ld. A.R. for Revenue on other hand contended that services were rendered in relation to sale of goods and therefore were covered under BAS upto 30.4.2006 and are even more specifically covered under BSS with effect from 1,4.2006. It is not the case of supply of manpower but a case of managing distribution and logistics in relation to transporting motor vehicles to the service recpients depot or dealer's premises. The extended period is invokable .....

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eful to reproduce the Agreement that the appellant entered into with the service recipient: Ref. MP/BT:MKTG SALES ADMN: 2004 Date: August 1, 2014 To: M/s Capital Transport Convoy Contractor Mhow Neemuch Road Near Mimani Wires Pvt. Ltd. Sector No. 1 Pithampur-454775 District Dhar (M.P.) Sub: Transportation of Light Commercial Vehicles & Muiti Utility vehicles from Pithampur to Guwahati Dear Sirs, With reference to our meeting dated 1.8,2004, we are, hereby, amending your contract for transpor .....

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sion of original receipts pertaining to the same along with the monthly transportation bill. 3. You will appoint an authorised representative to take delivery of the vehicles from our Factory gate at Pithampur. Your representative will check and ensure that the vehicle is in OK condition at the time of taking delivery. 4. You will take Light Commercial Vehicles and Multi Utility vehicles from our Factory at Pithampur and transportation by road will be arranged by you without any additional cost. .....

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tted you every month. 8. You will prepare delivery challan in accordance with our Invoice Cum Challan giving detailed description of the consignment, Engine Number, Chassis Number and Quantity (in case of component / took kits etc.) You will provide good drivers as and when vehicles are released to you and ensure that the vehicles are delivered to our depot in safe condition. In case of regular and persistent defaults on this court, we may reduce your share of business. 9. Your authorised driver .....

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the depot, will be recovered from you. 11. You will ensure that your drivers driving our vehicles by road do not carry any other goods or passengers. 12. You will take delivery of vehicles on specified and allotted vehicles only. 13. You will comply with all the rules and regulations of the State and Central Governments related to Motor Vehicles with regard to their usage/ transportation. 14. You will ensure that your aurhorised driver / convoy leaders engaged by you are holding a valid driving .....

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spect of Light Commercial vehicles and Multi Utility vehicles delivered to you and being transported by you. You will keep the Company's vehicles harmless and indemnified against all costs, consequences and damages that may arise on account of any unauthorised use. 17. It will be responsibility of you and your driver to inform us immediately of any accident or mishap or damage to the Light Commercial vehicles and Multi Utility vehicles during the course of transportation. 18. In case of any .....

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submit all papers to us. b) You will make arrangement for transportation of damaged Light Commercial vehicles and Multi Utility vehicles to our nearest Dealer/ Depot, name of which will be communicated to you after getting first information from you. 19. Along with each Light Commercial vehicles and Multi Utility vehicles, a separate stock despatch note will be handed over to your authorised person at the time of taking delivery at our Gate. 20. At the end of every month, you will submit a stat .....

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agreement that the appellant was not providing skilled drivers to the service recipient. Indeed, the appellant took the responsibility for transportation of the vehicles which inter alia involved (i) appointing an authorized representative to take delivery of the vehicles from the factory gate; (ii) arranging and employing skilled drivers to drive them to their destinations ensuring that the vehicles were driven safely and immediately to their respective destinations; (iv) preparing delivery cha .....

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lice panchnama and other of an accident it was to arrange for police panchnama and other formalities for insurance claim etc etc. It is thus evident that the appellant was entrusted to manage distribution and logistics in relation to transport and delivery of the vehicles at the service recipient's depots/dealer's premises. It was not merely making available skilled drivers to the service recipient. Indeed, the drivers were never provided the service recipient but were engaged by the app .....

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eriod 1.7.2003 to 30.4.06. During this period, BAS was defined under Section 65 (105)(19) as under: "business auxiliary service" means any service in relation to, - (i) promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) promotion or marketing of service provided by the client; or [Explanation. - For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, " service in relation to promotion or marketing .....

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goods or services intended for use by the client; (v) production or processing of goods for, or, on behalf of, the client; (vi) provision of service on behalf of the client; or (vii) a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi) such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management .....

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ents. Thus we hold that the demand pertaining to the period upto 30.4.2006 confirmed under BAS is not sustainable. This view is also supported by Bombay High court judgment in the case of Indian National Shipowners' Association vs. UOI - 2009 (14) STR 289 (Bom.) wherein it was in effect held that introduction of new entry presupposes that there was no earlier entry covering such services as are covered by the new entry if the earlier competing entry remained unchanged and in the present case .....

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d logistics, customer relationship management services, accounting and processing of transactions, [Operational or administrative assistance in any manner], formulation of customer service and pricing policies, infrastructural support services and other transaction processing. Explanation. - For the purposes of this clause, the expression "infrastructural support services" includes providing office along with office utilities, lounge, reception with competent personnel to handle messag .....

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impugned services were not covered under BSS can not be sustained. The appellant has argued that service recipient vide letter dated 8.12.07 stated that no service tax was payable as vehicles were removed on their own power and depots were treated as place of removal. We have perused the said letter dated 8.12.2007. From the said letter, it no way follows that merely because the depots are treated as place of removal of exercisable goods, any services provided by a provider of service to the se .....

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ellant when juxtaposed with the definition of BSS would not leave any scope for a reasonable person operating is an appropriate environment to objectively and sincerely entertain a belief that the definition of BSS did not cover the impugned services. The appellant had not taken any service tax registration nor did it file ST -3 returns of the services rendered. In the matrix of these facts and circumstances, the extended period is clearly invokable and none of the judgments cited by the appella .....

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30 days of the receipt of the impugned order in appeal. Having regard to the Punjab &. Haryana High Court judgments in the case of C.C.E. vs. First Flight Couriers - 2011 (20) STR 622 ( P & H) and C.C.E vs. Pannu Property Dealers - 2011 (24) STR 173 ( P & H), we are of the view that even in respect of the impugned order dated 26.2.2009 penalty under Section 76 need not be imposed together with penalty under Section 78 ibid. Further we find that in the impugned order-in-original daed .....

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der in appeal dated 25.2.2013 as the said order was in respect of show cause notice demanding service tax on same activity for subsequent period and cited the Supreme Court judgment in the case of Nizam Sugar Factory to support this proposition. While on the face of it there seems to be some traction in this contention, on closer examination we find that Revenue sought information with regard to services rendered for the period January 2008 to September 2008 vide letter dated 26.11.2008. It was .....

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mentioning the amount of service tax leviable or paid. This behaviour of the appellant manifestly shows suppression of facts on its part as it did not provide the requisite information required for computing service tax liability for issuing show cause notice in spite of numerous reminders over a period of several months. Therefore, the judgment of Supreme Court in Nizam Sugar Factory (supra) is not applicable in the present case as that judgment was in relation to central excise duty involving .....

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