Appellate ruling: Applicant's services as composite supply, transportation of goods by road, taxed at 18%.

The Appellate Authority determined that the services provided by the applicant constitute a composite supply with the principal supply being "transportation of goods by road." The services are classified under Service Code 996511, attracting a tax rate of 18% (9% CGST + 9% SGST). The vehicles used by the applicant were found not to fall under the term 'vessel' as per the relevant Notification. Consequently, the case was resolved in accordance with these findings.

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Issues Involved:
1. Classification of the services provided by the applicant.
2. Determination of the principal supply in the composite supply.
3. Applicability of the term 'vessel' to the vehicles used by the applicant.
4. Applicable rate of tax on the consideration received for the services.

Issue-wise Detailed Analysis:

1. Classification of the Services Provided by the Applicant:
The applicant, M/s. RVRC, entered into an agreement with TSMDC for excavation, transportation, and loading of sand. The services involved were considered a "composite supply" by both members of the lower Authority. The applicant initially claimed the services fell under "Works Contract" but later conceded this claim. Therefore, the classification issue focused on whether the services are "Excavating and Earthmoving Services" or "Goods Transport Services."

2. Determination of the Principal Supply in the Composite Supply:
The principal supply in a composite supply is defined as the predominant element. The Central Member held that "excavation of sand" was the principal supply, while the State Member held that "transportation of goods" was the principal supply. The Appellate Authority analyzed the intent and scope of the contract, the predominant activity, and the breakup of the upset price. They concluded that the principal supply is "transportation of goods" as it constitutes the main purpose of the contract, with excavation, loading, and road formation being ancillary activities.

3. Applicability of the Term 'Vessel' to the Vehicles Used by the Applicant:
The term 'vessel' was debated for its applicability to the applicant's vehicles (trucks/lorries). The Central Member referred to definitions from the Major Port Trusts Act and the CGST Act, concluding that 'vessel' pertains to water transport. The State Member inferred that 'vessel' includes containers for goods transport. The Appellate Authority found that the term 'vessel' in the Notification and the Act is specifically used for water transport services and does not cover land transport vehicles. Thus, the vehicles used by the applicant are not considered 'vessels.'

4. Applicable Rate of Tax on the Consideration Received for the Services:
The applicable rate of tax was determined based on the classification of services. Since the principal supply is "transportation of goods by road," the services fall under Service Code 996511 (Road Transport Services of Goods). The rate of tax for this service is 9% CGST + 9% SGST, aggregating to 18%, as per Notification No. 11/2017-Central Tax (Rate) dated 28-6-2017.

Conclusion:
The Appellate Authority concluded that the services provided by the applicant are a composite supply with the principal supply being "transportation of goods by road." The services are classifiable under Service Code 996511, and the applicable rate of tax is 9% CGST + 9% SGST, totaling 18%. The vehicles used by the applicant are not covered by the term 'vessel' in the relevant Notification. The subject reference was disposed of accordingly.

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