2024 (5) TMI 891 - AT - Service Tax

Classification of services - Business Support Service or not - providing space on roof for transportation of parcels/goods by the appellant to the Service Recipient - providing open space to the Service Recipient at its bus depot for storage of parcels/goods by the appellant - exemption from taxability under Notification No.25/2012-ST. Business Support Service or not - Providing space on roof for transportation of parcels/goods by the appellant to the Service Recipient - providing open space to the Service Recipient at its bus depot for storage of parcels/goods by the appellant - HELD THAT - The basic and the primary activity undertaken by the appellant was to provide the open space on the roof of the buses for transportation of general goods/small business items and domestic items. For providing the space on the buses, the appellant has been charging the license fee on monthly basis at the specified rates from M/s Sai Marketing and Loading Co. Therefore, under the agreement, the nature of activity to be performed by the appellant was limited only to provide the space on the roof of the buses and the entire work relating to booking, transit, delivery, loading, unloading of parcel, and specific allied service were the sole responsibility of M/s Sai Marketing Loading Co. - The definition of Business Support Services as defined in Section 65 (104c) specifies as to what constitutes support services of business. On perusal thereof, it is not found that the activity of providing open space on hire can be included in any of the activities specified in the definition. The Revenue has nowhere substantiated that the appellant managed distribution and logistics of M/s Sai Marketing Loading Co., rather in terms of the agreement, they are themselves responsible for all the related activities. The terminology managing distribution and logistics cannot be invoked to cover the instant activity under the definition of Business Support Service . Thus, the answer to the issues are decided against the Revenue and in favour of the appellant. Whether the appellant is entitled to exemption from taxability under Clause 22(b) of the Notification No.25/2012-ST dated 20.06.2012 of the mega exemption notification? - HELD THAT - The fact is that the agreement here does not speak of parcel or postal mail service. The agreement is clear that the purpose of it is to make available the space on the roof of the buses to M/s Sai Marketing Loading Co., which is hiring of space for license fee - the findings recorded in the impugned order not agreed upon, that it is only when a means of transportation of goods has been given on hire to a goods transport agency then such service of hiring is exempted from the payment of service tax, whereas in the present case only space on roof of the buses has been given on hire for keeping the goods/parcel for transportation and not the means of transportation, i e. bus has been given on hire - It was, therefore, concluded that the bus, which is primarily meant for carrying the passengers from one place to another, cannot be called the means of transport of goods and therefore, the appellant is not eligible to claim exemption under Clause 22 (b) of the notification. The said findings are unsustainable. The order deserves to be set aside. The appeal is, accordingly allowed.

Summary

Issues involved:
The issues involved in the judgment are:
1. Whether providing space on roof for transportation of parcels/goods can be considered as "Business Support Service" by the Department?
2. Whether providing open space at bus depot for storage of parcels/goods can be considered as "Business Support Service"?
3. Whether the appellant is entitled to exemption from taxability under Notification No.25/2012-ST?

Issue 1: Providing space on roof for transportation of parcels/goods:
The appellant, an autonomous body, entered into an agreement with a company for providing space on buses for transportation of parcels. The Tribunal found that the appellant's role was limited to providing space, and the responsibility for booking, transit, and delivery rested with the company. The Tribunal concluded that this activity did not fall under the definition of "Business Support Service" as per Section 65(104c). Therefore, this issue was decided in favor of the appellant.

Issue 2: Providing open space at bus depot for storage:
The Tribunal examined the agreement terms and found that the primary activity of the appellant was to provide open space for storage of parcels at bus depots. The Tribunal noted that the appellant charged a license fee for this space, and the responsibility for managing the parcels rested with the company. It was held that this activity did not qualify as "Business Support Service." Hence, this issue was also decided in favor of the appellant.

Issue 3: Exemption under Notification No.25/2012-ST:
The Tribunal analyzed Clause 22(b) of the notification, which pertains to services given on hire to a goods transport agency. It was observed that the agreement between the parties involved hiring of space for transportation of goods/parcels, falling under the exemption clause. The Tribunal disagreed with the lower authorities' interpretation and held that the appellant was not liable to pay service tax. Consequently, this issue was decided in favor of the appellant.

In conclusion, the Tribunal set aside the previous order and allowed the appeal in favor of the appellant.