Transportation and delivery of ready-mix concrete deemed contract for RMC transport, not vehicle hire; appeal allowed

Whether the contract constituted supply of goods or a declared service: tribunal found the work order imposed on the supplier the obligation to transport and deliver RMC, fixed payment per cubic metre for actual RMC transported, and required deployment of specified fleet capacity - indicating a contract for transportation/delivery of RMC rather than mere hiring of vehicles. Reliance on decisions concerning vehicle-hire was inapposite because those contracts were for hiring vehicles, not transportation of RMC. Consequence: the Commissioner (Appeals) order was set aside and the appeal allowed.

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Issues Involved:
1. Classification of service provided by the appellant.
2. Applicability of service tax on the service provided.
3. Validity of the demand of service tax with interest and penalty.

Summary:

1. Classification of Service Provided by the Appellant:
The appellant, M/s Gunesh Logistics, engaged in the transportation of Ready-Mix Concrete (RMC) for its customer M/s Ultratech Cement Ltd., contended that the service should be classified under "transportation of goods by road service" rather than "supply of tangible goods service." The appellant issued consignment notes and raised periodical bills for transportation charges based on the quantity of RMC transported and the distance traveled.

2. Applicability of Service Tax on the Service Provided:
A show cause notice was issued alleging that the appellant rendered "supply of tangible goods service," taxable under section 65B(44) and declared service under section 66E(F) of the Finance Act, 1994. The appellant argued that the activity was transportation of RMC, not hiring of vehicles, and referred to a prior favorable decision in a similar case (Gunesh Logistics vs. Commissioner of Central Excise & Service Tax, Jaipur - I).

3. Validity of the Demand of Service Tax with Interest and Penalty:
The Tribunal examined the work orders and statutory provisions, concluding that the appellant was engaged in the transportation of RMC, not in supplying tangible goods. The Tribunal noted that the appellant transported RMC in its vehicles under a contract and issued consignment notes, fulfilling the conditions for "goods transport agency" (GTA) service. The Tribunal found that the Commissioner had incorrectly classified the service as "supply of tangible goods" and confirmed the demand of service tax with interest and penalty.

Conclusion:
The Tribunal set aside the order dated 16.03.2018 by the Commissioner (Appeals), holding that the appellant was providing GTA service, not supply of tangible goods service. The appeal was allowed, and the demand of service tax with interest and penalty was overturned.

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