TaxTMI 
TaxTMI 
2019 (9) TMI 1419
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....he appellant claims that the consignment notes for each trip of transportation are issued by the appellant and periodical Bills are raised for transportation charges. As per the Work Orders, the transportation charges are payable partly based on the quantity of RMC transported and partly on the basis of distance travelled. The recipient of the service has been discharging Service Tax liability on a reverse charge basis as the service which the appellant claims to have been providing is "goods transport agency [GTA]". 3. The Department, however, entertained a view that the appellant was engaged in providing "supply of tangible goods" [STG] service which was taxable under Section 65(105)(zzzzj) of the Finance Act, 1994 [The Act] w.e.f. 16 May, 2008, as what was supplied by the appellant was "tangible goods", namely "transit mixer" to its customer. 4. Accordingly, a show cause notice dated 15 October, 2014 was issued to the appellant. The relevant portion of the show cause notice is reproduced below :- "2. On the basis of the information from the Deputy Commissioner, Central Excise Division, III, Ghaziabad that during the course of audit of M/s Samrudhi Cement Ltd. ....
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....the activity of transportation of RMC is not covered under the taxable service STG. It was highlighted that service tax on STG would get attracted when the supply of tangible goods is for the use of a service recipient, but in the instant case the work orders did not relate to supply of 'transit mixtures' but related to transportation of RMC. The appellant also pointed out that it had undertaken the activity of transportation of RMC by road in vehicles as per the work orders and that the appellant retained the possession of the vehicle and controlled the operation/maintenance through its own drivers/cleaners. The appellant also pointed out that it was paid transportation charges comprising of a specified sum per cubic meter quantity of RMC transported as also a specified sum per kilometer for the distance travelled during the month. The appellant, therefore, contended that the activity of transportation of RMC by road falls under the category of taxable service of GTA and even if the activity is considered as a composite service, then too the same would be classifiable under GTA based on the test of essential character of the service as contemplated under Section 65A of the Act. Th....
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....transportation of goods by road or services provided by a goods transport agency because in the case of transport of goods by road the service recipient books a vehicle for transportation of goods and pays freight for such booking for transportation of goods. The goods transport agency issues consignment note for such transportation of goods. Anyone booking a vehicle for transport of goods is not required to assure transportation of a minimum quantity of goods per vehicle per month and payment of charges for such minimum quantity. A goods transport agency cannot raise any consignment note for the quantity which has not been transported in the vehicles and accordingly, no freight can also be charged for the quantity that has not been transported because no service has been provided at all. Hence, the fact that the service recipient has assured the payment of charges against minimum quantity of goods per month per vehicle to the notice proves that this is not a case of transport of goods by road and the noticee is not acting as a goods transport agency. 21.4 As discussed in the preceding para, the contract entered into by the noticee envisages a minimum assured quantity to the....
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....n to transport of goods by road, issuance of a consignment note by the GTA, activity should be performed by a GTA for another and the activity is performed for consideration, which conditions were also satisfied by the appellant. (v) The extended period of limitation could not have been invoked in the show cause notice. 10. Shri Vivek Pandey, Learned Authorized Representative of the Department, however, submitted that there is no error in the findings recorded in the impugned order confirming the demand raised in the show cause notice. In this connection the following submissions have been made :- (i) A perusal of the works order dated 1 April, 2008 would clearly indicate that what was intended by the parties was actually supply of 'transit mixer' and, therefore, the service provided by the appellant would actually be classifiable under STG and not GTA. (ii) The Commissioner has correctly appreciated the terms of the work orders to conclude that the appellant is not performing GTA service since the appellant has been assured a minimum compensation against the supply of tangible goods per month per v....
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....ady Mix Concrete. 12. Minimum quantity : we assure to provide a minimum load of 745 cum per month per vehicle. In case the actual transportation is less than 745 cum we shall pay for minimum quantity of 745 cum. 15. Escalation : The rates per km at Rs. 20.34 mentioned in clause 11(b) are on the basis of diesel prices of Rs. 34.13 per litre. In case of any variation in rates of diesel the transportation charges payable shall be increased by Rs. 0.58 per km for each Re. 1.00 of increase in diesel rates. 22. You will carry out all operation and maintenance activities at your cost. You will maintain all vehicles used for providing the services under this agreement in good working condition with periodical servicing and repair. 26. Unloading Time : The Ready Mix Concrete is a product which has a low setting time and in case if material is not unloaded within 4 hours of loading time, then vehicle driver should inform the Company Representative and follow his instructions regarding diversion/unloading of the material, so that setting of the material is avoided. In case of setting of the material is bowl unit for the above reasons, the cost of removing the m....
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....rson to another and collected in such a manner as may be prescribed. The 'negative list' is provided for in Section 66D of the Act. Section 65B(44) of the Act as inserted w.e.f. 1 July, 2012 defines 'service' to mean any activity carried out by any person for another for consideration and includes a declared service but would not include certain services specified in clauses (a), (b) and (c). Declared services have been enumerated in Section 66E of the Act. Sub-clause (f) of Section 66E, which is relevant for the purposes of the controversy involved in this appeal, is as follows :- "(f) transfer of goods by way of hiring, leasing, licensing or in any such manner without transfer of right to use such goods;" 19. The appellant claims to be transporting RMC in vehicles under the contract awarded by the customers, particularly Grasim Industries Ltd. and Ultratech Cement Ltd. This transportation of RMC takes place in transit mixers from the premises of the customers on the basis of work orders issued. A perusal of the work order dated 1 April, 2008 issued to the appellant by Grasim Industries Ltd. indicates that the appellant was required to load RMC in the vehicles of the ....
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....icles for transport of 9000 M3 of RMC every month does not mean that the appellant has given vehicles on hire. The work order only requires the appellant to ensure that it has available a fleet of vehicles adequate enough to transport a particular quantity of RMC every month. Even the transportation charges are under two heads. The first is payment of a certain amount for the quantity of RMC transported during a calendar month and a certain amount per km for the distance travelled for transportation of RMC during the month. 22. It is for this reason that the appellant had contended that the activity of transportation of RMC by road falls under the taxable service GTA. However, this contention of the appellant has not been accepted by the Commissioner for the reason that clause 12 of the work order deals with a minimum quantity of RMC to be transported per month per vehicle. According to the Commissioner, it cannot be said to be a case of transportation of goods by road by a goods transport agency "because in the case of transport of goods by road the service recipient books a vehicle for transportation of goods and pays freight for such booking for the transportation of goods....