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2023 (12) TMI 379 - AT - Service TaxDemand of service tax - Vague show cause notice - SCN issued without specifying the classification of services - Assessment in terms of Section 72(a) - failure to furnish the return under Section 70 of the Finance Act, 1994 as amended - Activity of transportation of concrete from L T to Delhi airport project site during the period 2008 09 and 2009 10 using their own vehicle - GTA Service or not. Assessment in terms of Section 72(a) - failure to furnish the return under Section 70 of the Finance Act, 1994 as amended - HELD THAT - There is no clarity on the actual activity carried out by the appellant. The show cause notice is completely silent on the nature of respective activities so as to fall under any specific service as defined under the Finance Act. The authorities while issuing the show cause notice merely proceeded on the footing that the appellant has not submitted the relevant figures and therefore the department is left with no option but to issue the show cause notice on the basis of available facts and record with them. This Tribunal has time and again observed that the officers have ample powers under the statute to make effective enquiry and investigation. In M/S. SHUBHAM ELECTRICALS VERSUS CST ST, ROHTAK 2015 (6) TMI 786 - CESTAT NEW DELHI , the Tribunal quashed the show cause notice for the simple reason that relevant facts have not been stated while issuing the show cause notice. Similar are the observations by the Ahmedabad Bench of the Tribunal in INDO NIPPON CHEMICALS CO. LTD. VERSUS CCE, VADODARA 2009 (4) TMI 140 - CESTAT AHMEDABAD , observing that law gives sufficient powers to officers to conduct enquiries and investigations to bring out the truth, and without making any efforts, on the basis of non-production of documents, on the basis of assumptions and presumptions, a case cannot be made out against the appellant which is the case here. The department cannot take shelter on account of failure of the appellant to produce and supply the documents, and it was incumbent upon them to have ascertained the actual nature of the services for the purpose of levying the service tax under the respective clause - there are no hesitation in holding tht the show cause notice needs to be quashed being vague. The Principal Bench of this Tribunal in M/S EXPRESS ENGINEERS SPARES PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS SERVICE TAX, GHAZIABAD AND SH. NARESH KUMAR GUPTA (DIRECTOR) VERSUS COMMISSIONER, CENTRAL TAX, GST CENTRAL EXCISE, MEERUT 2022 (1) TMI 564 - CESTAT ALLAHABAD , referring to the decision of the Apex Court in BHARAT SANCHAR NIGAM LTD. (BSNL) VERSUS UNION OF INDIA 2006 (3) TMI 1 - SUPREME COURT , that the term transfer of right to use goods has neither been defined in the Constitution nor in any of the State VAT Acts or Central Sales Tax Act provided five attributes for a transaction to constitute a transfer of right to use goods. The activity of supplying the RMC by the appellant on which he has paid VAT, considering it to be a sale transaction has been considered earlier by this Tribunal in the case of GMK CONCRETE MIXING PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, DELHI 2011 (11) TMI 425 - CESTAT, NEW DELHI , where the Principal Bench held that the appellant was engaged in preparation of Ready Mix Concrete (RMC) and while carrying out such dominant object, other ancillary and incidental activities were also carried out - the appellant is not liable to pay service tax on the supply of RMC to M/s L T and hence the demand of service tax in that regard is not sustainable. Activity of transportation of concrete from L T to Delhi airport project site during the period 2008 09 and 2009 10 using their own vehicle - HELD THAT - The scope of liability of service tax in the category of Goods Transport Agency has been considered by the Tribunal in LAKSHMINARAYANA MINING CO. VERSUS COMMR. OF ST., BANGALORE 2009 (9) TMI 71 - CESTAT, BANGALORE , where the contention of the appellant therein that the levy under the category of GTA was attracted, only when there was a relationship of Agency between the service provider and owner of the goods, carnage or the operators of the goods carriage was upheld in view of the definition of GTA and also the clarification given by the Finance Minister in the Budget Speech note, service tax is chargeable in respect of services received from individual truck owners. The impugned order set aside - the demand of service tax proposed in the show cause notice under commercial or industrial construction services as per section 65 (105) (zzq) defined as per section 65 (25b) and Works Contract Services as per section 65 (105) (zzzza) of the Act nor are they chargeable to service tax under Supply of Tangible Goods Use of Goods . Consequently, neither the extended period of limitation is invocable nor the penalty and interest is leviable under the Finance Act. Appeal allowed.
Issues Involved:
1. Validity of the show cause notice. 2. Classification of services provided by the appellant. 3. Liability of service tax on the supply of Transit Mixers. 4. Liability of service tax on the sale of Ready Mix Concrete (RMC). 5. Liability of service tax on transportation services. 6. Invocation of extended period of limitation and imposition of penalties. Summary of Judgment: 1. Validity of the Show Cause Notice: The Tribunal found the show cause notice to be "vague" and lacking "clarity on the actual activity carried out by the appellant." It was noted that the notice did not specify the nature of the respective activities to classify them under any specific service as defined under the Finance Act. The Tribunal emphasized that the department should have conducted effective inquiries and investigations to ascertain the actual nature of the services. Citing previous judgments, the Tribunal held that the failure to gather relevant facts resulted in a "serious transgression of the due process of law," thereby quashing the show cause notice. 2. Classification of Services Provided by the Appellant: The Commissioner had classified the services rendered by the appellant under "Supply of Tangible Goods Service" and imposed service tax accordingly. However, the Tribunal held that the confirmation of service tax beyond the allegations raised in the show cause notice is not sustainable. The Tribunal noted that the show cause notice did not mention the provisions of Section 65(105)(zzzzj) defining "Supply of Tangible Goods for use Service," and thus the Commissioner's order went beyond the scope of the notice. 3. Liability of Service Tax on the Supply of Transit Mixers: The Tribunal agreed with the appellant's submission that the services rendered by them could not be classified under construction activities merely because the main contractor, M/s L&T, was engaged in providing construction services. The Tribunal referred to the Andhra Pradesh High Court's decision in G.S. Lamba & Sons vs. State of Andhra Pradesh, which concluded that the supply of transit mixers was a transfer of the right to use transit mixers. The Tribunal found that the appellant had transferred the right to use goods to M/s L&T, chargeable to VAT only, and not liable for service tax. 4. Liability of Service Tax on the Sale of Ready Mix Concrete (RMC): The Tribunal held that the supply of RMC by the appellant, on which VAT was paid, was a sale transaction and not a service. This was in line with the decision in GMK Concrete Mixing Pvt. Ltd. vs. Commissioner Service Tax, Delhi, where the Tribunal had held that the supply of RMC was not a taxable service under the Finance Act. Consequently, the demand for service tax on the supply of RMC was not sustainable. 5. Liability of Service Tax on Transportation Services: The Tribunal held that the transportation of concrete by the appellant using their own vehicles did not fall under the category of "Goods Transport Agency" (GTA) as defined under Section 65(50b) of the Act, since no consignment note was issued. The Tribunal referred to the Budget Speech of the Finance Minister and previous judgments, concluding that the appellant was not liable for service tax under GTA. 6. Invocation of Extended Period of Limitation and Imposition of Penalties: Since the Tribunal decided the issues on both preliminary grounds and merits in favor of the appellant, it set aside the impugned order. Consequently, the demand for service tax under "Commercial or Industrial Construction Services" and "Works Contract Services" was not chargeable. The Tribunal also held that the extended period of limitation was not invocable, and penalties and interest were not leviable under the Finance Act. Conclusion: The appeal was allowed, and the impugned order was set aside. The Tribunal pronounced its judgment on 7th December 2023.
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