The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed service tax demand and held that providing transit mixers for transportation of Ready Mix Concrete classifiable under goods transport agency services.
The brief facts of the present case are that whether providing of transit mixers for transportation of Ready-Mix Concrete (RMC) by the appellant, Prashant Logistics, under agreements with various RMC manufactures would attract any service tax levy under the service category of supply of tangible goods, instead of the category of GTA. The charges were recovered on per Cubic Meter of RMC + per KM of transportation basis with minimum monthly load commitment for transportation by manufacturers.
The show cause notice alleged that the appellant charge “Minimum Assured load of transit Mixer” and recovered the same from their customers, and hence it is not related to transportation charges but the charges towards the retention of the Transit Mixers by the customer irrespective of the fact that transit mixers are actually physically put to use or not. Thus, this charge is in the nature of rental charges for the supply of transit mixers and hence, it falls under the category of “Supply of Tangible Goods Services”.
Concurring with the contention made in the show cause notice the Adjudicating Authority has confirmed the demand of Service Tax treating the activity as “Supply of Tangible Goods Service” therefore the present appeal filed by the appellant.
Saurabh Dixit, Counsel who appeared on behalf of the appellant submitted that the nature of activity in the present case is that of transportation of RMC depends on how much load is transported as also distance of transportation. It was further submitted that manner of payment of service charge will not decide the category of service, it should be based on the nature of activity carried out by the service provider. In the present case the appellant’s responsibility is to transport the Ready-Mix Concrete (RMC) from the plant of the service recipient to their customer site. Therefore, the activity is clearly of transportation service.
P.K. Singh, Superintendent (AR), who appeared on behalf of the revenue reiterated the finding of the impugned order.
A Two-Member Bench comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member observed that “The purpose of transportation of RMC the consignment note was issued therefore the criteria prescribed to classify the activity under goods transport agency service is clearly satisfied. Therefore, on the basis of the fact of the present case, we have no doubted in our mind that the activity of the appellant is clearly falls under the definition of goods transport agency service. In such case there is no tax liability on the service provider as the service recipient is required to discharge the Service Tax on reverse charge mechanism in terms of Rule 2(d) of Service Tax Rules, 1994.”
“We are of the considered view that the activity of the appellant is classified under goods transport agency services. Accordingly, the demand raised under supply of tangible goods for use service is not sustained” the Bench said.
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