2024 (5) TMI 671 - AT - Service Tax

Nature of transaction - sale or service - Leviability of service tax on supply of ready mix concrete - demand confirmed on basis of difference of documents, without identifying the service. The case of Revenue is that the agreement reveals that appellant had to provide some services to M/s Signature Global (India) Pvt Ltd - appellant submits that they have only supplied the ready mix concrete which is an excisable product and has also paid VAT. HELD THAT - The Department though alleges that the appellant has rendered some services to M/s Signature Global (India) Pvt Ltd, it has not been made clear what was the classification of the service and what was the consideration received for the same. In the absence of specific service being identified, it is not open for the Department to assume that some service was made and therefore service tax is payable. This approach is not legally sustainable; it is the responsibility of the person alleging to prove the allegation with evidence; the Department failed to do so; moreover, an attempt has been made to confirm the duty of service tax on the basis of discrepancy in various statements and figures. It has been held in number of cases that such confirmation of tax is not legally sustainable. This bench in the case of M/S INDIAN MACHINE TOOLS MANUFACTURERS ASSOCIATION VERSUS THE COMMISSIONER OF CENTRAL EXCISE, PANCHKULA 2023 (9) TMI 815 - CESTAT CHANDIGARH has held 'It is a settled principle of law that service tax can be levied only when there is a clear identification of service provider, service recipient and consideration paid for the same. In the absence of any such evidence of the service recipient and the service provided, service tax cannot be demanded and confirmed.' Thus, demand of service tax cannot be confirmed without identifying the service and it cannot be confirmed on basis of difference of documents. Further, the issue of exigibility of supply of ready mix concrete to service tax has been decided in number of cases - the Tribunal in the case of GMK CONCRETE MIXING PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, DELHI 2011 (11) TMI 425 - CESTAT, NEW DELHI has observed ' Record does not reveal involvement of nay taxable service aspect in the entire supply of RMC. Rather the contract appears to be a sales contract instead of a service contract. In absence of cogent evidence to the effect of providing taxable service, primary and dominant object of the contract throws light that contract between the parties was to supply ready mix concrete but not to provide any taxable service. Finance Act, 1994 not being a law relating to commodity taxation but services are declared to be taxable under this law, the adjudication made under mistake of fact and law fails.' There are no merit in the impugned order; accordingly, the same is liable to be set aside - appeal allowed.

Summary

Issues involved:
The issue involves the leviability of service tax on the supply of ready mix concrete, confirmation of demand under various sections of the Finance Act, 1994, invoking the extended period for demand, and the imposition of penalties.

Leviability of Service Tax on Supply of Ready Mix Concrete:
The appellant, engaged in the business of manufacturing and supplying ready mix concrete, contested the demand of service tax based on the gross receipts in the Profit & Loss account. The appellant argued that they were not providing any service but were involved in the manufacturing and delivery of ready mix concrete, which is considered an excisable product. Citing various judgments, the appellant contended that since they had paid central excise duty and VAT on the products, charging service tax was not justified. The appellant also highlighted that the adjudicating authority confirmed the demand without considering the submitted documents proving no service was provided. The appellant further argued against the invocation of the extended period for demand, emphasizing the lack of evidence to prove any malafide intention or suppression on their part.

Confirmation of Demand and Imposition of Penalties:
The Revenue, represented by the Authorized Representative, maintained that the appellant had to provide services as per the agreement with M/s Signature Global (India) Pvt Ltd, and as the appellant did not register or pay service tax, there was an intention to evade payment. The Revenue contended that discrepancies in various returns justified the confirmation of service tax. However, the Tribunal found that the Department failed to prove the specific service provided and the consideration received. Relying on precedents, the Tribunal emphasized that service tax could only be levied when there was clear evidence of service provision and consideration. The Tribunal set aside the impugned order, stating that demanding service tax without identifying the service and solely based on document differences was legally unsustainable.

Decision and Conclusion:
After considering the arguments from both sides and reviewing the case records, the Tribunal concluded that the demand of service tax was not justified due to the lack of evidence proving the provision of taxable services. The Tribunal referred to previous judgments to support its decision that the primary purpose of the contract was the supply of ready mix concrete, not the provision of taxable services. Consequently, the impugned order was set aside, and the appeal was allowed.

Separate Judgment by Judges:
No separate judgment was delivered by the judges in this case.