Space hiring for parcel carriage is not Business Support Service and may qualify for exemption under the service tax notification.

Permitting use of bus roof space for carriage of parcels, and open depot space for storage, was treated as a space-hiring arrangement rather than Business Support Service because the appellant did not handle booking, transit, delivery, loading, unloading, insurance, staffing, logistics, or customer management. The activity therefore did not fall within the statutory scope of Business Support Service. Clause 22(b) of Notification No. 25/2012-ST was also applied on the footing that the space was given on hire to a goods transport agency for transportation of goods, so the transaction was considered exempt from service tax.

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Issues: (i) Whether providing space on the roof of buses for transportation of parcels or goods amounted to Business Support Service; (ii) whether providing open space at bus depots for storage of parcels or goods amounted to Business Support Service; (iii) whether the activity was exempt under Clause 22(b) of Notification No. 25/2012-ST dated 20.06.2012.

Issue (i): Whether providing space on the roof of buses for transportation of parcels or goods amounted to Business Support Service.

Analysis: The agreement showed that the appellant's role was confined to permitting use of roof space for carriage of parcels, while booking, transit, delivery, loading, unloading, insurance, staffing, and related operational responsibilities were undertaken by the other contracting party. The activity did not amount to evaluation of customers, telemarketing, order processing, fulfilment services, information and tracking, managing distribution and logistics, customer relationship management, accounting, operational assistance, or other similar support functions falling within the statutory definition of Business Support Service.

Conclusion: The issue was decided against Revenue and in favour of the assessee.

Issue (ii): Whether providing open space at bus depots for storage of parcels or goods amounted to Business Support Service.

Analysis: The depot space was also given only as ancillary space for keeping parcels, and the contractual terms did not show that the appellant managed or led the logistics of the parcel business. The arrangement was one of permitting use of space for consideration, not rendering of support services in relation to business or commerce.

Conclusion: The issue was decided against Revenue and in favour of the assessee.

Issue (iii): Whether the activity was exempt under Clause 22(b) of Notification No. 25/2012-ST dated 20.06.2012.

Analysis: Clause 22(b) exempts services by way of giving on hire to a goods transport agency a means of transportation of goods. The arrangement was treated as hiring of roof space for transportation of goods/parcels to a goods transport agency, and the exemption was held applicable to the transaction in question.

Conclusion: The assessee was held entitled to the exemption and not liable to service tax.

Final Conclusion: The demand of service tax could not be sustained and the appeal succeeded.

Ratio Decidendi: Where the contractual arrangement is confined to hiring of space for carriage or storage of parcels and the recipient undertakes the entire logistics and operational activity, the arrangement does not fall within Business Support Service and may qualify for the exemption applicable to hire services to a goods transport agency.

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