2012 (10) TMI 446 - Commissioner - Service Tax

Court rules pumping charges for Ready Mix Concrete not subject to service tax

The court ruled in favor of the appellant, a company engaged in the manufacture and supply of Ready Mix Concrete (RMC), in an appeal against a Show Cause ... Transport of goods other than water through pipeline or other conduit - Service tax on pumping charges - Meaning and scope of 'pipeline or conduit' - Construction of pipeline as taxable serviceTransport of goods other than water through pipeline or other conduit - Service tax on pumping charges - Meaning and scope of 'pipeline or conduit' - Pumping charges collected for de charging ready mix concrete at construction sites are not taxable as 'transport of goods other than water through pipeline or other conduit' service. - HELD THAT: - The appellant transports ready mix concrete (RMC) to the customer's site by special purpose transit mixer vehicles and has discharged service tax on the transportation up to the customer's premises. The additional activity of pumping/unloading at the site involves transferring RMC from the vehicle to the desired place within the site, using temporary hoses/compressors or manual means, and not movement through a permanent pipeline or conduit connecting terminal points. The Board's Circular distinguishes long distance fixed pipelines (used for petroleum, gas, slurry etc.) and treats construction of such pipelines as taxable; this indicates that 'pipeline or conduit' contemplates a permanent installation meant for long distance transport. Applying that common meaning, the site level pumping performed by the appellant cannot, by any stretch, be classified as transport through a pipeline or conduit. The authority therefore upholds the view earlier taken in the forum's Order in Appeal No. 32/2009 (MST) in RMC Readymix (I) Pvt. Ltd. and concludes that pumping RMC at construction sites does not attract service tax under the specified category. [Paras 8, 9]The impugned Order in Original is set aside and the appeal is allowed; pumping charges for RMC at construction sites are not taxable under 'transport of goods other than water through pipeline or other conduit'.Final Conclusion: The Commissioner (Appeals) allowed the appeal, holding that site pumping/unloading of ready mix concrete is not transport through a pipeline or conduit and therefore does not attract service tax under that category; the Order in Original is set aside. Issues:1. Whether pumping charges for de-charging ready mix concrete from a transit mixer to the spot through a pipeline attract service tax under the category of 'Transport of goods other than water through pipeline or other conduit' service.Analysis:The case involved an appeal filed by a company engaged in the manufacture and supply of Ready Mix Concrete (RMC) against a Show Cause Notice proposing a demand for service tax on pumping charges collected from customers. The issue revolved around whether the pumping charges for de-charging RMC from a transit mixer to the spot through a pipeline were liable to service tax under the category of 'Transport of goods other than water through pipeline or other conduit' service.The Directorate General of Central Excise Intelligence initiated an investigation based on intelligence that the company was transporting RMC to customers' sites through transit mixer vehicles and pumping the RMC with the help of pumps, collecting pumping charges separately. The company had not discharged its service tax liability on these charges, leading to the issuance of a Show Cause Notice proposing a demand for service tax, interest, and penalties.The appellant argued that the activity of pumping RMC at construction sites did not fall under the category of 'Transport of goods other than water through pipeline or other conduit' service. They cited a previous order by the Commissioner (Appeals) in a similar case where it was held that such activity did not attract service tax. The appellant contended that they were not engaged in transporting goods through pipelines or making pipelines available for transportation.During the hearing, the advocate representing the appellant requested to drop the proceedings based on a previous order by the forum in a similar case. The judge carefully examined the records and submissions, emphasizing that the appellant transported RMC using special purpose vehicles, not pipelines. The judge referred to relevant circulars clarifying that the service tax liability was intended for transportation through pipelines, which was not the case for the appellant.The judge concluded that the activity of pumping RMC at construction sites did not attract service tax under the specified category. Citing the previous order in a similar case, the judge set aside the impugned Order-in-Original and allowed the appeal, ruling in favor of the appellant.