2018 (6) TMI 439 - AT - Service Tax

GTA services - appellants are manufacturing and transporting the RMC from their plant to the site of their customers through a specially designed vehicle (Transit Mixed Vehicle) owned by them as well as taken on lease basis - Reverse Charge Mechanism - The department was of the view that such services would fall within the definition of Goods Transport Agency Service and that appellants are liable to pay service tax on the lease amount paid under reverse charge mechanism - Whether the activity of lease of special purpose vehicle for transport of RMC would fall under GTA service? Held that - The Tribunal in the case of Birla Ready Mix Vs. Commissioner of Central Excise 2012 (12) TMI 736 - CESTAT, NEW DELHI , on similar set of facts held that the said activity would not fall within GTA service - demand cannot sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the lease of a special purpose vehicle for the transport of Ready Mix Concrete (RMC) falls under Goods Transport Agency (GTA) service?

Analysis:
The case involved appellants engaged in executing various contracts and supplying RMC, registered with the Central Excise Department. The Department alleged that the appellants, by using specially designed vehicles to transport RMC, were liable to pay service tax under reverse charge mechanism. Show cause notices were issued for two periods, demanding service tax, interest, and penalties. The original authority confirmed the demand, leading the appellants to appeal before the Tribunal.

The appellant's counsel argued that the RMC is a premixed concrete that solidifies over time, necessitating the use of a Transit Mixture Vehicle (TMV) for transportation to prevent settling. The counsel contended that the transaction constituted a deemed sale, transferring the right to use goods, citing legal precedents supporting this argument. The Tribunal and a High Court decision were referenced to support the appellant's position that the lease of the TMV for RMC transport did not qualify as GTA service.

The Assistant Commissioner (AR) reiterated the findings of the impugned order during the proceedings. After hearing both sides, the Tribunal deliberated on whether the lease of the special purpose vehicle for RMC transport should be classified as GTA service. Citing the High Court's decision on the transfer of the right to use goods and the Tribunal's ruling in a similar case, the Tribunal concluded that the activity did not fall under GTA service. Consequently, the demand for service tax was deemed unsustainable, leading to the setting aside of the impugned order and allowing the appeal with any consequential relief.

In the final pronouncement, the Tribunal set aside the impugned order, allowing the appeal with any consequential relief. The judgment clarified that the lease of a special purpose vehicle for RMC transport did not qualify as GTA service based on legal precedents and established principles.