2024 (6) TMI 1184 - AT - Service Tax

Levy of service tax - Business Auxiliary services - transportation of their raw materials/finished products in and out of their factory premises - reverse charge mechanism - Rule 2(1)(d)(B) r/w N/N. 30/2012 ST dated 20.06.2012 - HELD THAT - In this case, it is the appellant who has hired the vehicles from vehicle owners and at the most, it could be a service provided by such vehicle owners to the Appellant for which there should have been flow of consideration by the appellant to them. That apart, there are no agreement or contract in this regard between the appellant and such vehicle owners for providing any service - Undeniably, it was the responsibility of the appellant to provide GTA service to CCCL by virtue of the existing contract between them. It is a fact borne on record that in respect hired vehicles, CCCL were not paying the freight directly to the other transporters because, they were under no obligation to pay them. Hence, the assumption that the amount retained by the appellant was towards the promotion of transport business of the other transporters is without any basis. This is also because, the goods transport service is provided to CCCL by these transporters but the payment for the same is by the appellant. Hence, to allege transport business the Revenue should have enough evidence to indicate that such transporters were in the transport business, they had an understanding with the appellant seeking promotion and that the same was for a consideration. There is no agreement/contract and there is also no flow of consideration from the transporters / vehicle owners to the appellant for having rendered service of BAS and hence, the allegation of provision of BAS lacks merit. The impugned order is set aside - Appeal allowed.

Summary

Issues:
- Whether the appellant is liable for service tax under BAS for the profit received from hired vehicles?

Analysis:
The judgment pertains to an appeal filed against an Order in Original passed by the Commissioner of Central Excise and Service Tax. The appellant, engaged by a company for transportation services, raised freight bills and received payments directly. The dispute arose when the authorities proposed to tax the profit received by the appellant under Business Auxiliary Services (BAS) for promoting the transport business of other transporters. The appellant denied rendering any BAS and liability to service tax. The Adjudicating Authority confirmed the demands, leading to the present appeal.

The main issue before the tribunal was whether the appellant could be held liable for service tax under BAS for the profit received from hired vehicles. The tribunal observed that the appellant had hired vehicles from owners to provide services to the company they were contracted with. There was no direct agreement or contract between the appellant and the vehicle owners for providing any service. The responsibility to provide the services to the company rested with the appellant, who hired vehicles to fulfill this obligation.

The tribunal noted that the Adjudicating Authority incorrectly assumed that the appellant was promoting the transport business of the vehicle owners. However, there was no evidence of any agreement or flow of consideration between the transporters and the appellant for BAS. The tribunal emphasized that the transporters did not pay any consideration to the appellant when their vehicles were hired, and there was no contractual relationship established. Therefore, the allegation of providing BAS lacked merit.

Consequently, the tribunal set aside the impugned order, allowing the appeal with any consequential benefits as per the law. The judgment was pronounced in open court on a specified date.