CESTAT rules no service tax on RMC supply

The Appellate Tribunal CESTAT, New Delhi allowed the appeal, ruling that the appellant was not liable to pay service tax on the supply of ready mix concrete (RMC) as the primary object of the contract was to supply RMC, not to provide a taxable service. The Tribunal held that no service tax was payable as the transactions did not involve any element of service such as pumping, pouring, or laying activities. The appellant was granted relief from the demand for service tax and the invocation of the extended assessment period.

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Issues:
1. Whether the appellant is liable to pay service tax on the supply of ready mix concrete (RMC)Rs.
2. Whether the activities of pouring, pumping, and laying of concrete constitute a taxable serviceRs.
3. Whether the appellant's transactions should be considered as works contracts or sale contractsRs.
4. Whether the appellant is entitled to the benefit of Notification No. 12/2003-S.T.Rs.
5. Whether the extended period for tax assessment was rightly invokedRs.
6. Whether the appellant is liable for any penaltyRs.

Analysis:
1. The appellant argued that the transactions for selling RMC for delivery at the site were not exigible to service tax as they were sale transactions without any element of service. The Commissioner wrongly demanded service tax on transactions where pumping, pouring, and laying activities were not involved. The Tribunal held that the primary object of the contract was to supply RMC, not to provide a taxable service, and thus, no service tax was payable.

2. The appellant contended that its activities were more appropriately covered under the category of 'execution of works contract service' introduced from 1-6-2007. The Commissioner's rejection of this submission was challenged. The Tribunal clarified that service tax cannot be levied on works contracts for any period before 1-6-2007, providing relief to the appellant.

3. The appellant sought the benefit of Notification No. 12/2003-S.T., dated 20-6-2003, allowing exclusion of the value of goods sold to the service receiver in the course of rendering taxable service. The Commissioner's denial of this benefit was disputed. The Tribunal did not address this issue explicitly in the judgment.

4. The appellant argued against the invocation of the extended period for tax assessment, claiming a bona fide belief that its activities were not taxable. The Commissioner's decision to invoke the extended period was challenged. The Tribunal noted that the appellant had started paying service tax from 1-6-2007, indicating no intention of evading tax, and ruled in favor of the appellant.

5. The appellant raised concerns about the computation of tax demand by the Commissioner, stating that the amounts received should have been treated as inclusive of tax. The Tribunal did not delve into this issue in the judgment.

6. Lastly, the appellant contested the justification for the levy of any penalty. The Tribunal did not provide a specific ruling on this matter in the judgment.

In conclusion, the Appellate Tribunal CESTAT, New Delhi allowed the appeal, stating that the contract between the parties was primarily for the supply of RMC, not for providing any taxable service. The Tribunal found no evidence of providing taxable service and held that the adjudication made under a mistake of fact and law failed.

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