2023 (10) TMI 1114 - AT - Service Tax

Taxability - supply of tangible goods service - appellant had supplied tangible goods namely transit mixtures to the clients - declared service or not - HELD THAT - A perusal of the work order clearly shows that it is a work order for transportation of RMC in vehicles from the plant of the appellant at Jaipur and responsibility has been cast upon the appellant to ensure transportation and delivery of the material within the time specified. The appellant is also required to pay transportation charges at Rs. 114/- per CuM for actual quantity of RMC transported during a calendar month. Of course, the work order also requires the appellant to deploy a fleet of 6 MB capacity of vehicles mounted on suitable chassis in numbers adequate to transport 1490 MB of RMC. Learned authorized representative of the department has, however, placed reliance upon the judgment of the Andhra Pradesh High Court in G.S. Lamba Sons 2011 (1) TMI 1196 - ANDHRA PRADESH HIGH COURT and the decision of the Tribunal in Ultratech Concrete 2018 (9) TMI 1204 - CESTAT CHENNAI - These two decisions would not come to the aid of the department for the reason that the contracts involved in the two decisions, as is clear from a perusal of the decision, is for hiring of vehicles for transportation of transit mixtures and not for transportation of RMC. The order dated 16.03.2018 passed by the Commissioner (Appeals), therefore, deserves to be set aside and is set aside - Appeal allowed.

Summary

Issues Involved:
1. Classification of service provided by the appellant.
2. Applicability of service tax on the service provided.
3. Validity of the demand of service tax with interest and penalty.

Summary:

1. Classification of Service Provided by the Appellant:
The appellant, M/s Gunesh Logistics, engaged in the transportation of Ready-Mix Concrete (RMC) for its customer M/s Ultratech Cement Ltd., contended that the service should be classified under "transportation of goods by road service" rather than "supply of tangible goods service." The appellant issued consignment notes and raised periodical bills for transportation charges based on the quantity of RMC transported and the distance traveled.

2. Applicability of Service Tax on the Service Provided:
A show cause notice was issued alleging that the appellant rendered "supply of tangible goods service," taxable under section 65B(44) and declared service under section 66E(F) of the Finance Act, 1994. The appellant argued that the activity was transportation of RMC, not hiring of vehicles, and referred to a prior favorable decision in a similar case (Gunesh Logistics vs. Commissioner of Central Excise & Service Tax, Jaipur - I).

3. Validity of the Demand of Service Tax with Interest and Penalty:
The Tribunal examined the work orders and statutory provisions, concluding that the appellant was engaged in the transportation of RMC, not in supplying tangible goods. The Tribunal noted that the appellant transported RMC in its vehicles under a contract and issued consignment notes, fulfilling the conditions for "goods transport agency" (GTA) service. The Tribunal found that the Commissioner had incorrectly classified the service as "supply of tangible goods" and confirmed the demand of service tax with interest and penalty.

Conclusion:
The Tribunal set aside the order dated 16.03.2018 by the Commissioner (Appeals), holding that the appellant was providing GTA service, not supply of tangible goods service. The appeal was allowed, and the demand of service tax with interest and penalty was overturned.