The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that no service tax payable on transferring trailers or trucks to Goods Transport Agency (GTA) for transporting goods by road.
The bench of Rachna Gupta (Judicial Member) has observed that the mere fact that the appellant was registered for rendering taxable service of ‘Supply on Tangible Goods’ is not sufficient to prove that the impugned activity is taxable under category of supply of tangible goods. The registration otherwise cannot be the evidence to prove the same.
The appellant/assessee is registered for proving the taxable services under the category of ‘Supply of Tangible Goods’. During the course of detailed scrutiny of records for the year 2013-14 and 2014-15, it was noticed that the appellants were engaged in supply of trailers owned by them. They had provided the said trailers to their various clients who further supplied the said trailers to other clients or those clients of appellants, being Goods Transport Agency (GTA) themselves, have used those trailers for transportation of goods by road.
The appellant had not paid service tax due to the reason that their clients had paid the service tax in respect of their further supply/ activity. It was also noticed that during the period 2012-13 the appellant had paid service tax on full rate without claiming any abatement.
The department was of the view that the appellant had provided impugned services of supplying their trailers under the taxable category of ‘Supply of Tangible Goods’. Therefore, the Show Cause Notice was issued to the appellant for demanding service tax amounting to Rs. 9,19,397 under section 73 along with interest and equal penalty under section 78 of the Act.
The adjudicating authority has confirmed the demand under section 73(2) along with interest under section 75 and imposed equal penalty. The appeal against the order has been rejected.
The appellant had provided the trailers to their various clients who further supplied the trailer to other clients. The appellant had not paid service tax due to the reason that their client had paid the service tax in respect of further supply of the trailers. The department took a wrong view that the appellant had provided impugned services under the taxable category of ‘Supply of Tangible Goods’.
The appellant contended that the appellant neither had charged service tax from their clients/GTAs nor had issued any consignment note for any movement of goods. The appellants are owners of the vehicles and provided the same to GTAs as per requirement.
The tribunal held that appellant has been transferring the trailers/trucks owned by him to others who being GTA themselves or through other GTAs have been transporting goods by road. The certificate produced by one of the client of the appellant shows that the said client has already discharged the service tax liability, the client himself being the GTA. There is no denial of the department to the fact nor is there any other evidence produced by the department that during the period when appellant had transferred the right of use, the effective control and the possession was still retained with the appellant.
The tribunal held that the activity rendered by the appellant is held to be of transfer by way of hire/rent of his trucks to the others is out of scope of the service tax net, hence, that the finding arrived at by the authorities below are incorrect.
Case Details
Case Title: M/s. Sudhir Road Lines Versus Commissioner of Central Excise and CGST, Jaipur I
Case No.: Service Tax Appeal No. 50002 of 2023 [DB]
Date: 21.01.2025
Counsel For Appellant: Vijai Kumar, Abhishek Jaju
Counsel For Respondent: V.J. Saharan
