2023 (12) TMI 566 - AT - Service Tax

Classification of services - supply of tangible goods service or GTA service - providing of transit mixers for transportation of Ready Mix Concrete (RMC) by the appellant under agreements with various RMC manufactures - charges were recovered on per Cubic Meter of RMC per KM of transportation basis with minimum monthly load commitment for transportation by manufacturers. 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. HELD THAT - The contention of the revenue cannot be agreed upon 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 exclusively to transport of Ready Mix Concrete which is paramount. The manner of payment of 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. In the case of SHRIPAD CONCRETE PVT. LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, SURAT-I 2023 (8) TMI 707 - CESTAT AHMEDABAD , this Tribunal has held that the appellant s service is correctly classifiable under Goods Transport Agency service for which service recipient M/s. Ultratech Cement Limited have discharged the service tax as required under Rule 2(d) of Service Tax Rules, 1994 under reverse charge basis. Therefore, the demand under the category of Supply of Tangible Goods service shall not sustain. Thus, the activity of the appellant is classified under goods transport agency services‟. Accordingly, the demand raised under supply of tangible goods for use service‟ is not sustained - the alternate pleadings made by the appellant that even if the service is not classifiable under GTA, then also the activity being a deemed sale not liable to service tax under supply of tangible goods for use service‟ not addressed. The impugned order set aside - appeal allowed.

Summary

Issues Involved:

1. Whether the provision of transit mixers for transportation of Ready Mix Concrete (RMC) falls under "Supply of Tangible Goods Services" or "Goods Transport Agency Service".
2. Applicability of service tax on the activity.
3. Classification based on the manner of payment.
4. Issuance of consignment notes as a criterion for classification.
5. Time-barred nature of the demand.

Summary:

The brief facts of the present case are that whether providing of transit mixers for transportation of Ready Mix Concrete (RMC) by the appellant under agreements with various RMC manufacturers would attract any service tax levy under the service category of supply of tangible goods, instead of the category of GTA. The charges were recovered on per Cubic Meter of RMC + per KM of transportation basis with minimum monthly load commitment for transportation by manufacturers.

1. Classification of Service:

The SCN alleged that the appellant charged "Minimum Assured load of transit Mixer" and recovered the same from their customers, which were deemed as rental charges for the supply of transit mixers, thus falling under "Supply of Tangible Goods Services". The Adjudicating Authority confirmed the demand of Service Tax treating the activity as "Supply of Tangible Goods Service".

2. Nature of Activity:

The appellant contended that the essence of the activity was transportation of RMC, which should be classified as Goods Transport Agency Service/Transport Service, not supply of tangible goods. The appellant's responsibility was to transport RMC from the plant to the customer site, indicating a transportation service.

3. Precedents and Judicial References:

The appellant referenced several judgments, including Gunesh Logistics 2020 (37) GSTL 193 (Tribunal Delhi), GS Lamba and Sons 2011(1)TMI 1196- Andhra Pradesh HC, Birla Ready Mix 2012 (12) TMI 736- CESTAT New Delhi, and others, which supported their claim that similar activities were classified as transportation services.

4. Consignment Notes:

The appellant issued consignment notes for the transportation of RMC, which is a key criterion for classification under "goods transport agency service". The tribunal found that the issuance of consignment notes satisfied the criteria for classification as a "goods transport agency service".

5. Manner of Payment:

The tribunal disagreed with the revenue's contention that the manner of payment (fixed and assured minimum amount) should determine the service category. The tribunal emphasized that the nature of the activity, which was transportation of RMC, should decide the classification.

6. Time-Barred Demand:

The appellant argued that the demand was time-barred due to a bona fide belief and cited judicial precedents supporting this claim. The tribunal did not address this issue directly but noted that the primary classification issue resolved the matter.

Judgment:

The tribunal concluded that the activity of the appellant clearly falls under the definition of "goods transport agency service". Consequently, the demand raised under "supply of tangible goods for use service" was not sustained. The impugned order was set aside, and the appeal was allowed.

(Pronounced in the open court on 23.08.2023)