TMI Blog2023 (11) TMI 723X X X X Extracts X X X X X X X X Extracts X X X X ..... LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, SURAT-I [ 2023 (8) TMI 707 - CESTAT AHMEDABAD ], the issue has been examined both for pre-negative list period and post-negative list period and it was held that the appellant s service is correctly classifiable under Goods Transport Agency service for which service recipient M/s. Ultratech Cement Limited have discharged the service tax as required under Rule 2(d) of Service Tax Rules, 1994 under reverse charge basis. Therefore, the demand under the category of Supply of Tangible Goods service shall not sustain. As all the evidences available on record and the decisions as above clearly show that the transactions were of GTA, service tax has rightly paid by the recipient of service i.e. M/s Inox. Admittedly, in the present case entire tax due has been paid in respect of these transactions between the appellant and his client. That being, the same transaction could not be levied to service tax both at the hands of the service recipient and the service provider under different category of services. In this case, if these transactions were to be taxed under the category of SOTG, as has been held by the impugned order e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is engaged in providing the services of GTA on which the due service tax is paid by the recipient of the service i.e. M/s INOX Air Products Ltd. [INOX]. 2.2 On the basis of information received that appellant is evading the service tax, the business-cum-residence premises of the appellant was searched on 11.12.2015 and various documents recovered were resumed under Panchnama dated 11.12.2015. Further, the statements of various persons namely Shri Prasant Bhayana, and Shri Sanjeev Bhayana, Partners of the appellant, were recorded. During the course of scrutiny of various agreements resumed from the premises of the appellant and the statements recorded, it was viewed that appellant had entered into an agreement with INOX units at various locations. Appellants were providing the Lorry Chassis to INOX on which specialized tanks/ equipments for carriage of gas was mounted by M/s Inox. These carriers with the mounted items were used for transportation of the gases. 2.3 Revenue was of the view that supply of chassis by the appellant on which the specialized tanks/ equipments were mounted by M/s INOX was provision of service under the category of Supply of Tangible Goods Services (S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... safe and timely delivery of goods at customer s location. Providing of sufficient number of drivers/ cleaners and payment of their wages and other claims Making payments towards toll / naka charges, octroi expenses and any other State and Interstate duties and taxes during the course of transportation of goods. Maintenance and upkeep of vehicle. Meeting requirement of Motor Vehicle Act. Fulfilling all the obligations in terms of statutory requirement for transportation of goods. Protect VITT and the goods stored within it. Appellant is responsible for completing the end to end transportation activity for M/s Inox and obligation under contract is clearly to transport the goods from one destination to another and such obligation does not stop at merely by supplying the Lorry Chassis. The appellant was issuing the consignment notes for transportation of the goods and was transporting the goods as per those consignment notes as a commercial obligation under the contract is clearly to transport of the goods from one destination to another. The fact that appellant issued consignment notes is admitted and accepted in the impugned order. All the above fact clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e upon the party through impugned show cause notice in the light of legal provisions mentioned above. It has been alleged in the SCN that services provided by the owners of the vehicles do not come within the scope of GTA on the ground that (i) the definition of GTA itself clarified that only the services of an agency providing services in relation to transportation of goods by road are covered under /within the scope of GTA and not mere transportation of goods by road (ii) the 'owner' of the goods carriage could not be said to be Goods Transport Agent , the taxable service of GTA under Section 65(105) (zzp) is to be provided to a customer, by a GTA, in relation to transportation of goods in a goods carriage and accordingly, the same person could not be owner of the goods carriage as well as his own agent (iii) Notfn. No.29/2008 dated 26.06.2008 exempts the taxable service of supply of goods carriage without transferring the possession and effective control of such goods as referred to sub-clause (zzzj) of clause (105) of Section 65 provided by a person to a goods transport agency for use by the said GTA. It is stated in the SCN that the said Notfn., thus clearly bough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arayana (supra), pertain to a period prior to the amendment in the definition of GTA wherein the phrase 'commercial concern' was substituted with 'any person'. Hence, reliance cannot be placed on the said decisions. Further, in the case of Caps and Prints (supra), the individual truck owners did not issue any consignment notes. Accordingly, reliance placed on the said decision is flawed. It is also submitted that the services will not qualify as GTA Services only in circumstances wherein the individual truck owners do not issue consignment notes. Once consignment notes are issued, the services provided by any person will qualify as GTA Services with no exclusion for individuals/owners. I agree with the submissions put forward by the party as also discussed hereinabove. 31. It has also been alleged in the SCN that the owner of the goods carriage could not be said to be GTA as the same person could not be owner of the goods carriage as well as his own agent. The following decisions have been quoted in the SCN in this regard where it was held that individual truck owners are not liable to pay Service Tax under GTA: i. Bellary Iron Ores Pvt. Limited Vs.. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iduals) who provides service in relation to transport of goods by road is liable to Service Tax. There is no exclusion of individual truck owners from the purview of Service Tax levy under the law........ 32. I find that the above observation of Hon'ble Tribunal has squarely answered the pointunder discussion and accordingly, the suggestion that the 'owner' of the goods carriage could not be said to be GTA as per SCN is not tenable. I also find that the Finance Minister's budget speech quoted in the SCN relates to year 2004 whereas the changes in definition of GTA took place in 2006 and hence the same is not relevant. 33. It has also been stated in the SCN that transporter and GTA have separate status as per notification no. 29/2008 dated 26.06.2008 which exempts the taxable service of supply of goods carriage without transferring the possession and effective control of such goods as referred to sub-clause (zzzj) of clause (105) of Section 65 provided by a person to a goods transport agency for use by the said GTA to provide any service as referred in Section 65(i05) (zzzj) to a customer in relation to transportation of goods by road in the said goods car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions of the agreement between the party and Inox. Clause 2 of the agreement states that, during the period of subsistence of agreement PCL (Pranish Carriers LLP) shall ply the feet (lorry chassis of transporter) exclusively for Inox and InoX would be free to utilize the fleet as it deem fit for the purpose of its business . Clause 3 makes it clear that the lorry chassis would be used for transportation of products of M/s Inox to its various customers 24 hours a day and 365/366 days a basis in lieu of consideration given to PCL. In clause 3a, it is stated that in case the vehicle is idle for more than seven days for whatsoever reason attributable to PCL, the proportional fixed charges will be deducted from the fixed charges for the entire period in excess of seven days for which the vehicle was not in use. Further conditions include increase/decrease in running cost linked with price of diesel, right of Inox to mount (install/uninstall) either new tank or old VITT on lorry chassis, fixing of standard distances for each of the location to where the product of the Inox is transported and Inox will not allow any changes in the standard distance barring unforeseen conditions and PCL h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Govt, municipal or other authority, all the VITTs and their fitting/accessories would be absolute property of Inox, PCL is solely responsible for obtaining road permits and complying with all the statutory provisions in respect of the fleet, PCL has all the responsibility of proper drivers/cleaners their salary etc., the VITT attachments and fittings mounted/attached on/to each of the vehicle/prime movers shall at all times the property of Inox, PCL shall at all times be responsible for the safety of the VITTs and shall be solely responsible for the return of VITTS attachments and fitting to Inox in good condition on expiry or sooner termination of the agreement, PCL responsible for safety of equipments and product, the crew of each lorry chassis should be instructed to reach the destination within the transit time as mutually agreed and in case the lorry being unable to reach the destination within the stipulated time, PCL will need to Communicate the same to the officials of Inox immediately and Inox will impose a penalty for mutually agreed amount if the reason for the delayed delivery for the product is not necessary, the entire fleet of PCL should have road permit to operate i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have cited various arguments and submitted documents such as Insurance Policies of the vehicles used for transportation of goods taken by them, Road permits/certificates taken by the party, Document relating to subscription obtained by them of Employees Provident Fund Organization ('EPFO'), Letter issued from Employee State Insurance Corporation ('ESIC) asking them to obtain the requisite registration under the Employee State Insurance Act (ESI Act), Transit Declaration Form TDF-1, Receipt of the fine paid by the driver of the vehicle to the RTO, Suspension order of the vehicle by Traffic Officer, Pune etc. Moreover, the agreement also provide that the party will be responsible for proper upkeep, maintenance and repair of the goods on their own expenses, they will be responsible for all permits/licences to be taken from govt. authorities, the driver and other crew members will be provided by the party, the responsibility for safety of VITT and goods under movement etc. These abovementioned terms and conditions of the Agreement coupled with the submission/acceptance of the party themselves that effective control and possession of the goods remain with them leads to Concl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch supply must be of tangible goods. 'Tangible Goods' are that which can be touched as contrasted with intangible (or invisible) assets, such as company's goodwill or the expertise of its staff. ++ However, it should not result in passage/reassignment of right of possession and of effective control over the said tangible goods to the lessee/ user at the expense of the lessor/ owner/ provider of tangible goods. The above clarification also makes it clear that, transaction of allowing another person to use the goods, without giving legal right of possession and effective control, not being treated as sale of goods, is treated as service. Further, it is also clarified that whether a transaction involves transfer of possession and control is a question of fact and is to be decided based on the terms of the contract and other material facts. This could be ascertainable from the fact whether or not VAT is payable or paid. I have already discussed this aspect hereinabove in terms of the agreement between the party and M/s Inox and also as per the submission/acceptance of the party that there was no transfer of possession and control of the goods by the party to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above under Article 366(29A) of the Constitution of India, the dominant nature test need not apply and the sale element of those contracts can be subjected to sales tax by the concerned state even if one or more of the ingredients for sale as specified by Section 4 of Sale of Goods Act 1930 are absent. Thus one would have to examine the nature of transactions that one intends to bring under this category of service as the same would also have to be seen from the sales tax/VAT angle to know the overall liability for the assessee. In the instant case, the party itself admitted that there was no transfer of right to use and no sales tax/ vat was paid on the transaction involved leading to the conclusion that there was indeed an element of providing service v de the referred agreement between the two viz. M/s. Pranish Carriers and M/s Inox. 4.3 In the present case one of the most important fact for determination of the liability to payment of service tax is the nature of transaction that is in dispute. Undisputedly, appellant was issuing consignment notes to cover the transportation of the goods from premises of service recipient to various points and for such transportation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to tax but the services rendered by a goods transport agency in relation to the transportation of goods by road and road transport agency tasked with responsibilities that others connected with road transport are not, with consignment note being the point of difference. There is also no doubt that Rule 4B of the Service Tax Rules, 1994 lays down the contents of a consignment note. 14. In view of the above discussions and the decisions cited (supra) and taking into consideration the essential requirement of issuance of consignment note , in order to attract the definition of Goods Transport Agency , we hold that the transport contractors rendering the coal transportation services in mines cannot be said to be Goods Transport Agency and therefore, their services cannot be made amendable to levy of service tax in the category of transportation of goods by road services . Hence, the impugned demand of service tax, interest and penalty cannot sustain and therefore, the same is set aside. In view of the above, we find that the findings made by the Ld. Commissioner cannot be interfered with and hence, the demand has been rightly dropped in the impugned adjudication orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has to ensure that the drivers/cleaners observe at all times the safety and other procedures as prescribed (Clause 8.XIV). m. The Appellant has to ensure that the crew associated with the vehicle operates the vehicle in a safe manner associated with the product being transported (Clause 8.XVI). n. The Appellant is also required to ensure that the Lorry Chassis and its accessories are maintained properly in good working conditions at all times. The maintenance and repair of the Lorry Chassis is the responsibility of the Appellant (Clause 8.XIX). o. The VITT s attachments and fittings mounted/ attached on/ to each of the vehicle/ prime mover was at all times the property of INOXAP. Appellant was responsible for its safety and was responsible and liable for return of the VITT s attachment and fittings to INOXAP in good condition, on expiry or sooner termination of the agreement (Clause XXI, XXII, XXIII). p. Appellant was responsible to ensure the delivery of goods loaded on the lorry at destination within transit time as agreed mutually with INOXAP. In case of delay which is not explained properly penalty was impossible on the appellant (Clause 8.XXIV) q. The Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods by him, issue a goods receipt in such form and manner as may be prescribed. (2) The goods receipt shall be issued in triplicate and the original shall be given to the consignor. (3) The goods receipt shall be prima facie evidence of the weight or measure and other particulars of the goods and the number of packages stated therein. (4) The goods receipt shall include an undertaking by the common carrier about the liability under section 10 or section 11. Section 10 Liability of common carrier. (1) The liability of the common carrier for loss of, or damage to any consignment, shall be limited to such amount as may be prescribed having regard to the value, freight and nature of goods, documents or articles of the consignment, unless the consignor or any person duly authorized in that behalf have expressly undertaken to pay higher risk rate fixed by the common carrier under section 11. (2) The liability of the common carrier in case of any delay up to such period as may be mutually agreed upon by and between the consignor and the common carrier and specifically provided in the goods forwarding note including the consequential loss or damage t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te every month. 3. The services shall commence within 15 days from the date of acceptance of this work order. 11. Transportation Charges: The transportation charges payable to you shall be as below : (a) Rs. 140/- per cum for quantity of Ready Mix Concrete transported during a calendar month; and (b) Rs. 20.34 per km for distance travelled during the month in the transportation of our Ready Mix Concrete. 12. Minimum quantity : we assure to provide a minimum load of 745 cum per month per vehicle. In case the actual transportation is less than 745 cum we shall pay for minimum quantity of 745 cum. 15. Escalation : The rates per km at Rs. 20.34 mentioned in clause 11(b) are on the basis of diesel prices of Rs. 34.13 per litre. In case of any variation in rates of diesel the transportation charges payable shall be increased by Rs. 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 Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipment and appliances for use, without transferring right of possession and effective control of such machinery, equipment and appliances; Post-Negative List 18. Section 66B provides that there shall be levied a tax to be referred to as service tax on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such a manner as may be prescribed. The negative list is provided for in Section 66D of the Act. Section 65B(44) of the Act as inserted w.e.f. 1 July, 2012 defines service to mean any activity carried out by any person for another for consideration and includes a declared service but would not include certain services specified in clauses (a), (b) and (c). Declared services have been 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 vehi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arded 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. 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... July, 2012 to 31 March, 2013. 26. The following conditions have to be satisfied pre-negative list for a service to qualify as a GTA service : (i) There should be an activity in relation to transport of goods by road; (ii) Issuance of consignment note by the GTA; (iii) Activity is performed by a GTA for another; and (iv) Activity is performed for consideration. 27. It cannot be doubted that the first condition with regard to both pre-negative list and the post-negative list is satisfied since RMC has been transported by the appellant using transit mixers of the appellant by road. The second condition relating to issuance of consignment note by GTA in the pre-negative list period and the post-negative list period is also satisfied as the appellant had issued the consignment notes. The third condition in the post-negative list period is that the activity should be performed by the GTA for another. It cannot be doubted that the appellant has undertaken the transportation of RMC for the mine owners. The fourth condition of the post-negative period is that the activity should performed for a consideration. It cannot also be doubted that the appellant is rec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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