2023 (10) TMI 1382 - AT - Service Tax

Classification of service - supply of tangible goods for use service or otherwise - providing the cylinder skid vehicle to the service recipient on charge based on per trip - HELD THAT - As per the fact which is not in dispute between the appellant and the revenue that the charges for providing the vehicle to Raj Company is on per trip basis. This shows that the transaction is not of renting of vehicle as in case of renting the fixed amount is charged on monthly basis or lump sum however if the charge is on the basis of per trip that prima facie shows the activity is of transportation. However the aspect that whether the activity falls under GTA or otherwise and consequently the liability of service tax can be passed on the appellant was not examined for the obvious reason that neither the department has contended nor the appellant has raised the issue but on the basis of fact it prima facie appears that the activity can be classified under GTA - matter needs to be reconsidered from the aspect of GTA. The impugned orders are set side - appeals are allowed by way of remand to the Adjudicating Authority.

Summary

Issues involved:
The issue involved in the present case is whether providing the cylinder skid vehicle to the service recipient on a charge based on per trip is liable to service tax under the category of supply of tangible goods for use service or otherwise.

Summary:

Issue 1 - Classification of Service:
The appellant argued that the agreement between them and the service recipient clearly indicates that effective control of the truck and skid was transferred to the recipient, thus the service should not be categorized under supply of tangible goods for use service. The appellant contended that the charges being on a per trip basis signify a transportation activity rather than renting of the vehicle. The department did not raise the issue of whether the activity falls under Goods Transport Agency (GTA) service, but it prima facie appears to be so. The Tribunal set aside the impugned orders and remanded the case to the Adjudicating Authority for reconsideration from the aspect of GTA, while keeping all other issues open.

This judgment highlights the importance of examining the nature of the service provided and its classification under relevant tax categories, such as supply of tangible goods for use service or GTA service, to determine the liability of service tax. The Tribunal emphasized the need for a thorough analysis of the facts and agreements between the parties to make a proper determination in such cases.