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TMI Blog2023 (11) TMI 723X X X X Extracts X X X X X X X X Extracts X X X X ..... lty of Rs. 4,34,12,380/- (Four Crore Thirty Four Lakh Twelve Thousand Three Hundred Eighty only) upon M / s Pranish Carriers LLP, G-41, Sector-39, Noida under Section 78 of Finance Act 1994. However, as per second proviso to section 78 of the Act ibid, if the party pays the adjudged amount of Service Tax alongwith interest with in a period of 30 days of receipt of this order the penalty payable shall be 25% of the above said amount provided that the reduced amount of penalty is also paid within 30 days. (d) I impose penalty of Rs. 10,000/- (Rupees Ten Thousand only) in terms of Section 77(1) (a) of the Finance Act, 1994 upon M/s Pranish Carriers LLP, G-41, Sector-39, Noida for not taking Service Tax registration under Section 69 of the Finance Act, 1994. (e) The adjudged dues will be paid henceforth." 2.1 Appellant 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plain that and effective control over these chassis continue to lie in the hands of the appellant. Further, the agreement imposes the responsibility of proper maintenance. The agreement was in respect of providing the chassis owned by the appellant to M/s Inox on hire charges which included fixed and variable charges as per travelled distance. The appellant has accepted that there was not transfer of effective control and possession of the goods i.e. chassis and in support of this the appellant has provided various documents. The essence of the contractual arrangement between the appellant and M/s Inox is rendition of services of transportation from one location to another, and not supply of the chassis as is evident from the following:- Transporting of gas from one place to another Ensuring 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 Vehi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant Adjudicating Authority in his order observed as follows:- 26. I find that the Show Cause Notice alleges that the activity carried out by the party is covered under the service "Supply of Tanaible Goods for Use" upto 30.06.2012 as defined under Section 65(105)(zzzzj) of the Finance Act, 1994 and under Declared Service as defined in Section 66(E)(f) w.e.f. 01.07.2012 whereas the party has submitted that the activity carried out by them is covered under category of "Goods Transport Agency" (GTA). The GTA is defined as under Section 65 (50b) as below:- "Goods Transport Agency means 'any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called'. 27. I intend to analyze the allegations made 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt note is the only condition in respect of such service of transport of goods by road by any person. In the light of foregoing, I find that it is not correct to suggest that only an agency is covered under GTA. 30. Further, the party in its written defence reply has submitted that the Commissioner has placed reliance on the decisions of Bellary Iron & Ore Pvt Ltd Vs. CCE Belgam [2010 (18) STR 406 (Tri-Bang)]; Laxminarayana Mining Co v CST, Bangalore [2009 (16) STR 691 (Tri-Bang)]; Caps and Prints (P) Ltd v CST Kolkata [2013 (30) STR 426(Tri-Kolkata), to conclude that owners of vehicles/individual truck owners providing transportation services are not liable to Service Tax. It is pertinent to note the decisions of Bellary Iron (supra) and Laxminarayana (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 servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are plain and unambiguous, there is no need to place reliance on external aids such as parliamentary proceedings. There is no reason given as to how and why this conclusion could be reached in the light of the legal provisions for levy of Service Tax on GTA service. Under Section 65(50b), Goods Transport Agency means 'any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called'. Section 65(105(zzp) defines taxable service as 'service provided or to be provided to any person, by a goods transport agency, in relation to transport of goods by road in a goods carriage'. From these legal definitions it is clear that any person (including individuals) 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation to supply of tangible goods including machinery, equipment and appliances for use, without transferring right of possession and effective control of such machinery, equipment and appliances". For the period starting w.e.f. 01.07.2012, the SCN alleges that the same service falls under category of 'Declared Services' as defined under Section 66E(f) of the Finance Act, 1994 as, transfer of goods by way of hiring, leasing, licensing or in any Such manner without transfer of right to use such goods'. For ascertaining the exact nature of the service provided by the party, it is imperative to analyze the terms and conditions of the agreement. 35. I have carefully gone through the terms and conditions 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 365/36 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all recover all losses and damages from PCL, PCL shall not normally sell any lorry chassis which would be in the use of Inox during the agreement period and incase PCL desires to do so, PCL has to give ninety days prior written notice for the same and Inox may, at its option and without in any way being obliged to do so, allow its said VITT to be transferred at PCL's cost to a new lorry chassis, insurance of vehicle and driver etc. is responsibility of PCL, PCL has to ensure that each lorry chassis is equipped with registration books, valid pollution control certificates, road and other tax certificates and permits and driving licences, PCL shall keep lorry chassis registered in its name with the RTO, 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 responsib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided by the party actually falls within the category of 'Supply of Tangible goods for Use' service till 30.06.2012 and transfer of goods by way of hiring, leasing, licensing or in any such manner without transfer of right to use such goods' w.e.f. 01.07.2012 onwards. I have also gone through the submissions of the party in this regard. I find that the agreement was in respect of providing the lorry chassis owned by the party to M/s Inox on hire charges which included fixed and variable charges as per travelled distance. I find that the party itself has accepted that there was no transfer of effective control and possession of the goods i.e. lorry chassis. In support of their claim they 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 F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods for use and leviable to VAT / sales tax as deemed 'sale of goods, is not covered under the transfer of Scope of the proposed service. Whether a transaction involves 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." It would therefore be essential to proceed with the examination of the definition of the taxable service in the light of what has been explained above. In the definition of the taxable service indicated in Section 65 (zzzzj), the key ideas are identified as under: - ++ There must be a supply. ++ Such 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made. The Supreme Court in the aforesaid case (BSNL Vs. UO) had reiterated that the sale element in those contracts not falling under the aforesaid six clauses would be taxed depending on the substance of the contract (i.e. applying dominant nature test). Here, the intention of the parties entering into the particular transaction of sale would be important. However, in cases where the contract falls under any of the six categories specified 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, we agree with the arguments canvassed by the Ld. CA for the appellant that the mandatory requirement of issue of consignment note, in order to constitute "Goods Transport Agency" as has been specifically defined in the Act, was not the subject matter of examination so as to decide the taxability in the hands of assessee receiving goods transportation services and therefore, the aforesaid Apex Court's decision has no application in the instant case. 13. We find it worth taking note of the observation made by the Tribunal in JWC Logistics Pvt. Ltd. (supra) as below: "8. It is not the transportation of goods by road that is subject 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied and medically fit. The Appellant is responsible for payment of wages to the drivers/cleaners who will be exclusive employees of the Appellant (Clause 8.X); j. The Appellant has to ensure that the drivers employed by it possess at least 5 years of experience in driving heavy motor vehicles of which 2 years should be of driving hazardous liquid cargo (Clause 8.XI). k. All the appointments of drivers are to be made by Owner of the Appellant and all drivers/cleaners/other employees engaged for this work should always carry an ID card duly signed by the Owner of the Appellant (Clause 8.XIII). l. The Appellant 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 attach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are entrusted to the common carrier for carriage thereof; (e) "goods" includes- (i) containers, pallets or similar articles of transport used to consolidate goods; and (ii) animals or livestock; (f) "goods forwarding note' means the document executed under section 8; (g) "goods receipt" means the receipt issued under section 9; Section 9 Goods receipt (1) A common carrier shall,-- (a) in case where the goods are to be loaded by the consignor, on the completion of such loading; or (b) in any other case, on the acceptance of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 013. The relevant terms of the first work order dated 1 April, 2008 are reproduced below :- "1. You shall load material (Ready Mix Concrete) in your Vehicles, transport the same to the required destinations unload the material at customer sites, return and take another load on similar basis in a clean vehicle in accordance with prudent industrial practices. 2. For this purpose you will deploy fleet of 6 M3 Capacity of vehicles mounted on suitable chassis in numbers adequate to transport 9000 M3 of Ready Mix Concrete 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 65(105)(zzp) is as follows :- 'taxable service' means any service provided or to be provided- to any person, by a goods transport agency, in relation to transport of goods by road in a goods carriage;" 17. On the other hand, the taxable entry for supply of taxable goods is contained in Section 65(105)(zzzzj) and is as follows :- "65(105)(zzzzj) to any person, by any other person in relation to supply of tangible goods including machinery, equipment 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 incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant and it had to deploy manpower to operate and control the vehicles. 21. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssuance of the consignment note has not been disputed in the show cause notice. 25. It would be seen from that pre-negative list period prior to 1 July, 2012 that the following two conditions have to be satisfied for a service to fall within the purview of GTA service :- (i) There should be transportation of goods by road; and (ii) Issuance of consignment note by GTA for the post-negative list period from 1 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 4.9 Admittedly, in the present case entire tax due has been paid in respect of these transactions between the appellant and his client. That being, we are of the view that 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 entire amount paid by the service recipient under the category of GTA services on the reverse charge basis should have been refunded. There is no scope of double transaction under the statute. The demand made in the present case after noting the payment of tax as the hand of service recipient the same transaction goes contrary to the Article 265 of the Constitution and hence cannot be sustained. 4.10 As we are unable to sustain the demand of service tax on the merits, issues of extended period of limitation, demand of interest and penalties imposed are irrelevant and are not being taken up. 5.1 Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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