2009 (9) TMI 225 - AT - Service Tax

Appellant Liable to Pay Service Tax on Vehicles Supplied to BSNL; Appeal Rejected; Tax Recalculation Ordered

The Member (T) held that the appellant was liable to pay service tax on the supply of vehicles to M/s. BSNL. The appellant's argument that the services ... Liability to pay service tax on supply of vehicles - control of recipient over vehicles as determinative of taxable service - cum-tax valuation where service tax not separately chargedLiability to pay service tax on supply of vehicles - control of recipient over vehicles as determinative of taxable service - Appellant liable to pay service tax for providing vehicles to M/s. BSNL. - HELD THAT: - The Tribunal examined whether the contracted provision of vehicles to M/s. BSNL for official use attracted service tax. Having considered the case record and the precedents cited, the Tribunal found the present facts akin to Neeraj Construction (supra) and applied its ratio. The vehicles, being engaged by M/s. BSNL under governmental guidelines and effectively under BSNL's control, rendered the activity taxable; accordingly the appellant was held liable to pay service tax on the supply of vehicles to BSNL.Liability to pay service tax is upheld and the appeal is rejected on this point.Cum-tax valuation where service tax not separately charged - Valuation for service tax to be determined on the basis that gross amount received is inclusive of service tax and tax must be recalculated. - HELD THAT: - The appellant asserted that no separate amount was charged by BSNL towards service tax. The Tribunal accepted that contention for the limited purpose of valuation and directed that the gross amount received by the appellant be treated as a cum-tax value. Consequently, the tax amount requires recalculation treating the received payments as inclusive of service tax. For this limited quantitative determination the matter was remanded to the original authority for computation.Valuation to be recalculated on a cum-tax basis by the original authority; matter remitted for that purpose.Final Conclusion: Appeal dismissed except for remand to the original authority to recompute service tax treating the gross receipts as inclusive of tax (cum-tax valuation); liability to pay service tax on supply of vehicles to M/s. BSNL affirmed. Issues: Liability of service tax on transport services provided to M/s. BSNLAnalysis:1. Issue of Official Use: The appellant argued that the transport services provided to M/s. BSNL officers were for their official use and, therefore, should not be subject to service tax. The appellant relied on previous decisions such as R. S. Travels v. CCE, Meerut, CCE, Mangalore v. Sunil S. Kotian, and Kuldip Sing Gill v. CCE, Jalandhar to support this contention.2. Control of Vehicles: The Revenue contended that the vehicles provided by the appellant to M/s. BSNL were under the control of BSNL, as per the clarification issued by M/s. BSNL. The Revenue argued that the vehicles were engaged by M/s. BSNL as per government guidelines for official purposes. The Revenue cited decisions like Neeraj Construction v. CCE, Jaipur and CCE, Vapi v. Bhartiben R. Patel to support their case that service tax should be applicable.3. Judgment: After considering the arguments and case laws presented by both sides, the Member (T) held that the appellant was liable to pay service tax on the supply of vehicles to M/s. BSNL. The Member relied on the decision in Neeraj Construction case and directed the appellant to pay service tax. However, since the appellant claimed not to have received a separate amount for service tax, the Member instructed that the gross amount received should be considered as cum-tax value for recalculating the tax amount. The matter was remanded to the original authority for this limited purpose, while the appeal was rejected. The judgment was dictated and pronounced in open court by the Member (T).