2023 (11) TMI 220 - AT - Service Tax

Classification of services - Goods Transport Agency or Supply of Tangible Goods for use service? - supplying Trucks to ONGC under contract for inter-locational movement of ONGC material - HELD THAT - In the said service, the main ingredients are that for hiring of trucks the right to possession and effective control should not be transferred. However, the learned Commissioner has not given clear findings whether right to possession and effective control has been transferred or otherwise. These are the main factors which decide whether the service falls under the supply of tangible goods for use or otherwise. Therefore, this aspect needs to be reconsidered. The appellant have claimed that service in question is classifiable under GTA service. In this regard we find that under an agreement with ONGC, the appellant is supplying trucks which are used for inter-location movement, i.e. transportation of ONGC s materials including Oil field equipment, machinery, mud-chemical etc. in the Oil field on the condition prevailing at the work sites of ONGC. As regard the said transaction appellant strongly argued that the ONGC is paying service tax under the category of Goods Transport Agency and they are providing GTA services - the submission of the ld. Chartered Accountant agreed upon that no double taxation is permissible under the law, subject to the decision that under which category the service in question legally falls. Although the show cause notices refer to the charge of intention to evade payment of tax on the part of the appellant, no concrete evidence is forthcoming to substantiate this charge against the appellant. This aspect has not been fully examined and discussed in any of the orders passed by the authorities below. It is, therefore, necessary that in the interest of justice, the matter needs to be remanded to the Commissioner (Appeals) keeping all the issues open. Appeal allowed by way of remand.

Summary

Issues:
The issues involved in the judgment are the classification of services provided by the Appellant to ONGC under the category of Goods Transport Agency (GTA) or Supply of Tangible Goods for use service, double taxation on the same transaction, and the alleged intention to evade tax.

Classification of Services - GTA vs. Supply of Tangible Goods for Use Service:
The Appellant supplied trucks to ONGC for inter-locational movement of materials, with hiring charges based on duration of supply. The Department contended that the services should be classified under 'Supply of Tangible Goods for use service' instead of GTA. The Appellant argued that all criteria for GTA services were met, as the trucks were registered as goods carriages and used for transportation. They also highlighted that ONGC had already paid service tax under GTA, preventing double taxation. However, the Commissioner did not provide clear findings on the transfer of right to possession and effective control, necessitating a reconsideration.

Verification of Tax Payment by ONGC:
The Appellant claimed that ONGC had paid service tax under GTA, which should prevent further taxation. However, there was no verification of whether ONGC had indeed discharged the tax liabilities. The absence of this verification led to the need for a fresh decision by the Commissioner (Appeals) after proper examination.

Alleged Intention to Evade Tax:
Although the Department alleged an intention to evade tax, no concrete evidence was presented to support this claim. This aspect was not adequately examined in the previous orders, requiring a thorough review to ensure justice.

Conclusion:
The Tribunal set aside the previous order and remanded the case to the Commissioner (Appeals) for a fresh decision after providing the Appellant with an opportunity for an effective hearing. The decision was made to address the issues of classification of services, verification of tax payment by ONGC, and the alleged intention to evade tax. The appeals were allowed by way of remand for further consideration.