Appellants exempt from Service Tax for providing bullock carts to farmers for transporting sugarcane

The appellants were found not liable to pay Service Tax on the rent received for providing bullock carts with tyres to farmers for transporting sugarcane. The court determined that the services fell under the negative list and were not subject to Service Tax as the appellants did not exercise effective control over the carts, which were used by farmers who provided their own bullocks and drivers. The decision was based on the understanding that the appellants supplied tangible goods for agricultural purposes, exempting them from Service Tax obligations. The appeal was allowed in favor of the appellants.

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Issues:
Whether the appellants are liable to pay Service Tax on the rent received for allowing the harvesting contractors to use bullock carts with tyres without bullocks or driver for transporting sugarcane to sugar factoriesRs.

Analysis:
The appeal challenged an order demanding Service Tax on the rent received by the appellants for providing bullock carts with tyres to farmers for transporting sugarcane. The period in question was post-negative list. The department claimed a gross billed amount and issued a show cause notice demanding duty, interest, and penalty. The Adjudicating Authority confirmed the demand, which was upheld by the Commissioner (Appeals).

The appellants argued that they only provided bullock carts with tyres, not bullocks or drivers, and did not exercise effective control over the carts. They cited a previous order by the Commissioner (Appeals) for a similar period, which held that such services fell under the negative list and were not liable to Service Tax. The Revenue's representative contended that the appellants retained effective control over the bullock carts based on the agreement terms with the service receivers.

After considering the arguments and case laws, the Member (Judicial) found that the appellants supplied bullock carts without bullocks or drivers to farmers, who had to provide their own bullocks and drivers. The possession and control of the carts were with the farmers, not the appellants. The Member agreed with the earlier order and held that services related to agricultural produce by renting agro machinery were outside the purview of Service Tax. The Tribunal's previous decision also supported this view. Thus, the Tyre Bullock Carts provided by the appellants for agricultural purposes fell under the negative list and were not liable to Service Tax under the category of Supply of Tangible Goods Service.

Consequently, the appeal was allowed, providing the appellants with consequential relief, if any.

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