TMI Blog2023 (12) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration towards service cannot be the criteria to decide the classification of service. Since undisputedly for the purpose of transportation of RMC the consignment note was issued therefore the criteria prescribed to classify the activity under goods transport agency service‟ is clearly satisfied. Therefore, on the basis of the fact of the present case, there are no doubt that the activity of the appellant is clearly falls under the definition of goods transport agency service‟. In such case there is no tax liability on the service provider as the service recipient is required to discharge the Service Tax on reverse charge mechanism in terms of Rule 2(d) of Service Tax Rules, 1994. In the case of GUNESH LOGISTICS VERSUS COMMISSIONER OF C. EX. SERVICE TAX, JAIPUR-I [ 2019 (9) TMI 1419 - CESTAT NEW DELHI] , the Principal Bench has held 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. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treating the activity as Supply of Tangible Goods Service therefore the present appeal filed by the appellant. 2. Shri Saurabh Dixit, Learned Counsel, appearing on behalf of the appellant submits that the nature of activity in the present case is that of transportation of RMC depends on how much load is transported‟ as also distance of transportation‟. 2.1 He submits that the prime essence is the arrangement of transporting RMC, this clarified as Goods Transport Agency Service/ Transport Service and not supply of tangible goods at all. He submits that manner of payment of service charge will not decide the category of service, it should be based on the nature of activity carried out by the service provider. In the present case the appellant‟s responsibility is to transport the Ready Mix Concrete (RMC) from the plant of the service recipient to their customer site. Therefore, the activity is clearly of transportation service. 2.2 He submits that the identical issue has been decided by this Tribunal in the case of Gunesh Logistics 2020 (37) GSTL 193 (Tribunal Delhi).In that case also there was demand of transportation of Ready Mix Concrete (RMC) by usin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent (AR), appearing on behalf of the revenue reiterates the finding of the impugned order. 4. We have carefully considered the submission made by both the sides and perused the record. We find that the revenue has alleged that the appellant‟s activity is supply of tangible goods for use‟ in as much as the appellant have provided the vehicle to the service recipient. On the examination of the fact of the case we find that as per the contract between the appellant and the service recipient, who were engaged in the manufacture of ready-mix concrete is that the appellant is obliged to transport the ready-mix concrete from the plant of the service recipient to the site of the customers of the service recipient. The entire case of the department is that since the manner of payment is fixed and assured minimum amount, the activity cannot be treated as transportation of goods, but it is supply of tangible goods for use to service recipient. 4.1 We do not agree with the contention of the revenue that merely on the basis of manner of payment the category of service can be decided. There is no doubt that the appellant have been assigned the job by the service recipient exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... signment 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 postnegative 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 receiving consideration from the service recipient as is clear from the invoices raised by the Appellant to the service recipient. 28. Thus, the Appellant has been rendering GTA service by transporting RMC from one place to another as per the directions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken on daily basis. The distance travelled for transportation of the material shall be on the shortest route basis irrespective of actual route taken by you. 11. Transportation Charges : The transportation charges payable to you shall be as below: A) Rs. 150/- per CuM for quantity of RMC transported during calendar month. TM should not be old more than 7 years. B) Rs.33.94/- per km for distance travelled during the month of transportation of our RMC 12 Minimum quantity : We assure to provide a minimum load of 745CuM per month per Vehicle. In case the actual transportation quantity is less than 745CuM. we shall pay for the differential quantity @ Rs. 120/- per CuM. 13. We assure to provide a minimum quantity 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 14. The above charges shall include all costs including diesel and lubricants. No other costs shall be payable to you. However, octroi toll charges for transportation shall be payable extra on actual subject to submission of receipt. 17. Escalation : The rates per Km at Rs.33.94 mentioned in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cement Limited as recipient of service for discharging service tax of such transportation. On the basis of these facts, it is absolutely clear that the appellant are providing service of transportation of goods whereas the demand is raised under the category of service of Supply of Tangible Goods for Use. We have no hesitation to opine that as per facts of the present case, the activity cannot be classified under the supply of Tangible Goods for Use service therefore, the demand cannot be sustained. Moreover, this issue has been considered by this Tribunal wherein the facts were absolutely identical for the reason that the transportation service was for M/s. Ultratech Cement Limited and in the same terms and conditions. In the case of Gunesh Logistics (supra), this Tribunal passed the following order:- 2. The appellant claims that it is engaged in transportation of Ready Mix Concrete [RMC] in vehicles in terms of the contracts executed by Grasim Industries Ltd. and Ultratech Cement Ltd. in its favour. The agreements require the appellant to transport RMC from the premises of its customer to the designated places in vehicles having a rotating drum [Transit mixer] (popularly kn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the loss shall be recovered from your bills at the rate of Rs. 3000.00 per cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 140/- per cum for the quantity of RMC transported during the month. Under the second part, the appellant was to receive Rs. 20.34 per km for distance travelled in the transportation of RMC. 20. It is clear that under the work order, the appellant was required to load RMC in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the appellant had given the vehicle on hire. The Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld 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 receiving consideration from the service recipient as is clear from the invoices raised by the appellant to the service recipient. 28. Thus, 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. 29. It is, therefore, not necessary to examine the other contentions raised by the Learned Counsel for the appellant. The impugned order dated 15 January, 2016 is accordingly, set aside and the appeal is allowed. 6. From the above decision of the principal Bench of this Tribunal, it can be seen that the facts such as transportation of RMC by similar vehicles for M/s. Ultratech Cement Limited for transportation from M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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