TMI Blog2019 (9) TMI 1419X X X X Extracts X X X X X X X X Extracts X X X X ..... oncrete 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 requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per the Work Orders, the transportation charges are payable partly based on the quantity of RMC transported and partly on the basis of distance travelled. The recipient of the service has been discharging Service Tax liability on a reverse charge basis as the service which the appellant claims to have been providing is goods transport agency [GTA] . 3. The Department, however, entertained a view that the appellant was engaged in providing supply of tangible goods [STG] service which was taxable under Section 65(105)(zzzzj) of the Finance Act, 1994 [The Act] w.e.f. 16 May, 2008, as what was supplied by the appellant was tangible goods , namely transit mixer to its customer. 4. Accordingly, a show cause notice dated 15 October, 2014 was issued to the appellant. The relevant portion of the show cause notice is reproduced below :- 2. On the basis of the information from the Deputy Commissioner, Central Excise Division, III, Ghaziabad that during the course of audit of M/s Samrudhi Cement Ltd. (Now M/s. Ultratech Cement Ltd.), C-5, C-6 Shri Krishna Plaza, Commercial Complex, Near Sai Temple, Nyay Khand-I. Indirapuram, Ghaziabad that they had hired Tangible Goods i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , but in the instant case the work orders did not relate to supply of transit mixtures but related to transportation of RMC. The appellant also pointed out that it had undertaken the activity of transportation of RMC by road in vehicles as per the work orders and that the appellant retained the possession of the vehicle and controlled the operation/maintenance through its own drivers/cleaners. The appellant also pointed out that it was paid transportation charges comprising of a specified sum per cubic meter quantity of RMC transported as also a specified sum per kilometer for the distance travelled during the month. The appellant, therefore, contended that the activity of transportation of RMC by road falls under the category of taxable service of GTA and even if the activity is considered as a composite service, then too the same would be classifiable under GTA based on the test of essential character of the service as contemplated under Section 65A of the Act. The appellant also contended that the extended period of limitation could not have been invoked. 6. The Commissioner, however, did not accept the contention of the appellant that the agreement was for transportation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oking for transportation of goods. The goods transport agency issues consignment note for such transportation of goods. Anyone booking a vehicle for transport of goods is not required to assure transportation of a minimum quantity of goods per vehicle per month and payment of charges for such minimum quantity. A goods transport agency cannot raise any consignment note for the quantity which has not been transported in the vehicles and accordingly, no freight can also be charged for the quantity that has not been transported because no service has been provided at all. Hence, the fact that the service recipient has assured the payment of charges against minimum quantity of goods per month per vehicle to the notice proves that this is not a case of transport of goods by road and the noticee is not acting as a goods transport agency. 21.4 As discussed in the preceding para, the contract entered into by the noticee envisages a minimum assured quantity to them and they are entitled to payments relating to the minimum assured quantity even if the said minimum quantity is transported or not. In fact both the agreements dated 1-4-2008 and dated 1-4-2011 specify the minimum load per mont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een invoked in the show cause notice. 10. Shri Vivek Pandey, Learned Authorized Representative of the Department, however, submitted that there is no error in the findings recorded in the impugned order confirming the demand raised in the show cause notice. In this connection the following submissions have been made :- (i) A perusal of the works order dated 1 April, 2008 would clearly indicate that what was intended by the parties was actually supply of transit mixer and, therefore, the service provided by the appellant would actually be classifiable under STG and not GTA. (ii) The Commissioner has correctly appreciated the terms of the work orders to conclude that the appellant is not performing GTA service since the appellant has been assured a minimum compensation against the supply of tangible goods per month per vehicle even if the said quantity is transported or not. The invoice has, therefore, raised a bill for certain quantity of RMC never transported and, therefore, no consignment note can be said to have been issued for the same. (iii) Merely describing that the work was for transport of RMC in vehicles would not mean that work order was essentiall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsportation charges payable shall be increased by ₹ 0.58 per km for each Re. 1.00 of increase in diesel rates. 22. You will carry out all operation and maintenance activities at your cost. You will maintain all vehicles used for providing the services under this agreement in good working condition with periodical servicing and repair. 26. Unloading Time : The Ready Mix Concrete is a product which has a low setting time and in case if material is not unloaded within 4 hours of loading time, then vehicle driver should inform the Company Representative and follow his instructions regarding diversion/unloading of the material, so that setting of the material is avoided. In case of setting of the material is bowl unit for the above reasons, the cost of removing the material will be borne by the company. But in case delay is on account of transit time due to fault of driver then cost of removing the material from bowl will the borne by you. 32. Your drivers and cleaners/helpers shall take all precautions to ensure that the material loaded in the Bowl is delivered at the customers' sites in good condition. In case of any loss due to improper conduct by your people th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n enumerated in Section 66E of the Act. Sub-clause (f) of Section 66E, which is relevant for the purposes of the controversy involved in this appeal, is as follows :- (f) transfer of goods by way of hiring, leasing, licensing or in any such manner without transfer of right to use such goods; 19. The appellant claims to be transporting RMC in vehicles under the contract awarded by the customers, particularly Grasim Industries Ltd. and Ultratech Cement Ltd. This transportation of RMC takes place in transit mixers from the premises of the customers on the basis of work orders issued. A perusal of the work order dated 1 April, 2008 issued to the appellant by Grasim Industries Ltd. indicates that the appellant was required to load RMC in the vehicles of the appellant and transport the same to the required destinations where it was required to be unloaded. The transportation charges payable to the appellant were in two parts. The appellant was to receive ₹ 140/- per cum for the quantity of RMC transported during the month. Under the second part, the appellant was to receive ₹ 20.34 per km for distance travelled in the transportation of RMC. 20. It is clear that und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nth and a certain amount per km for the distance travelled for transportation of RMC during the month. 22. It is for this reason that the appellant had contended that the activity of transportation of RMC by road falls under the taxable service GTA. However, this contention of the appellant has not been accepted by the Commissioner for the reason that clause 12 of the work order deals with a minimum quantity of RMC to be transported per month per vehicle. According to the Commissioner, it cannot be said to be a case of transportation of goods by road by a goods transport agency because in the case of transport of goods by road the service recipient books a vehicle for transportation of goods and pays freight for such booking for the transportation of goods . 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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