2018 (5) TMI 1362 - AT - Service Tax

Business Support Services - the appellant had supplied RMC from their plant to the site of the customer through Transit Mixer Vehicle and the RMC is poured out by pumping from the special purpose vehicle and delivered at the desired location in the site - As the appellant had not discharged service tax on the service provided by them to clients in respect of RMC supplied to other manufacturers, the department was of the view that the said activity falling under Business Support Service is liable to service tax. Held that - After analyzing the entire documents as well as submissions of the appellant, the Commissioner has held that there is no proof that the appellants have collected pumping and mobilization charges relating to RMC batched by others. In such circumstances, the confirmation of demand of service tax cannot sustain, being beyond the scope of the show cause notice - Admittedly, the appellant have discharged VAT on the entire amount received by them for supply of RMC which includes charges collected for mobilization, pouring and pumping. The activity of pumping and pouring would not fall under BSS. Apart from these, the appellants has been paying excise duty on RMC manufactured by them @ 1% with effect from May 2011 - Since the demand in the show cause notice confines to the pouring and pumping charges in respect of RMC manufactured by others and as there is a categorical finding on facts by the Commissioner that the appellant has not collected any such charges in respect of RMC batched by other manufacturers, we hold that the demand is without any legal or factual basis and not sustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether the activity of pouring and pumping concrete by the appellant constitutes Business Support Service (BSS) liable to service tax.
- Whether the appellant collected charges for pumping concrete from other manufacturers and is liable for service tax.
- Whether the demand for service tax is sustainable based on the evidence presented.
- Whether the definition of BSS includes the activity of pumping and pouring concrete.
- Whether the appellant's activity falls under the category of sale of goods rather than a taxable service.

Analysis:
1. The case involved the appellants, engaged in the production of Ready Mix Concrete (RMC), facing a demand for service tax under Business Support Services (BSS) for activities related to pumping and pouring concrete. The department claimed that the appellant had not discharged service tax on services provided to clients in respect of RMC supplied to other manufacturers, leading to the issuance of a show cause notice.

2. The appellant argued that the primary nature of their transaction is the sale of goods, with pumping and pouring concrete being incidental to the sale. They contended that the activity does not fall under BSS, citing previous tribunal decisions and the ambiguity in the department's classification of the activity under different heads.

3. The Commissioner's order highlighted that there was no evidence to prove that the appellants collected charges for pumping concrete from other RMC manufacturers. The appellant consistently maintained that they did not handle pumping for RMC supplied by others, and the demand was based on a single purchase order without substantial evidence.

4. The definition of BSS was examined, and it was concluded that the activity of pumping and pouring concrete does not fall under BSS. Additionally, the appellant was discharging excise duty on RMC manufactured by them, further supporting the argument that the activity should not be taxed under service tax.

5. Relying on previous tribunal decisions, it was established that the primary object of the contract between parties is the sale of RMC, making the activity of pouring and pumping concrete non-taxable as a service. As there was no evidence to support the demand for service tax on charges related to RMC from other manufacturers, the demand was deemed unsustainable.

6. The Tribunal set aside the impugned order, allowing the appeal with consequential relief, emphasizing that the demand lacked a legal or factual basis. The judgment was pronounced on 16th May 2018 by the Bench comprising Hon'ble Ms. Sulekha Beevi C.S. and Hon'ble Shri Madhu Mohan Damodhar.