Truck owner wins appeal against service tax demand under 'Supply of tangible goods' category

The Tribunal ruled in favor of the appellant, a truck owner, in an appeal against the demand of service tax under the 'Supply of tangible goods' category for a specific period. The Tribunal held that the appellant's belief that they were engaged in transportation services on behalf of the service recipient, not taxable in their hands, was bonafide. As the demand was confirmed using the extended period of limitation, it was deemed time-barred, and no penalty could be imposed. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief.

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Issues:
Appeal against demand of service tax under 'Supply of tangible goods' category for a specific period invoking extended period of limitation.

Analysis:
The appellant, a truck owner providing trucks on hire basis for transportation of goods, appealed against the demand of service tax under the 'Supply of tangible goods' category for the period from 01.10.2008 to 31.03.2013, invoking the extended period of limitation. The appellant contended that they should not be liable to pay service tax under this category as they provide trucks on a Kilometre basis and do not issue Goods Receipts (GR) for transportation. The appellant argued that the trucks are not provided to courier companies for unrestricted use but are meant to ply on specific routes and destinations agreed upon during booking. The appellant also referred to a budget speech clarifying no service tax on truck owners or operators. Additionally, the appellant claimed that post 01.07.2012, their activity was not taxable as per section 66D of the Finance Act, 1994, excluding transportation of goods by road from service tax, except for goods transport agency or courier agency services.

The appellant further relied on the decision of Birla Ready Mix and a specific notification to support their case. They contended that the demand was time-barred, hence no penalty should be imposed. On the contrary, the Revenue supported the impugned order. The Tribunal analyzed the definition of taxable service under section 65(105)(zzzzj) of the Finance Act, 1994, which includes services related to the supply of tangible goods without transferring possession and control. The Tribunal observed that the appellant genuinely believed they were engaged in transportation services on behalf of the service recipient, not taxable in their hands, as evidenced by agreements with service recipients.

Consequently, the Tribunal held that the appellant's belief was bonafide, and they were not liable to pay service tax under the 'Supply of tangible goods' category. Since the demand was confirmed using the extended period of limitation, the Tribunal ruled it was time-barred, and no penalty could be imposed. Therefore, the impugned order was set aside, and the appeal was allowed with any consequential relief.

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