The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that no service tax is payable on supply of cranes to municipality.
The bench of Rachna Gupta (Judicial Member) and Hemambika R. Priya (Technical Member) has observed that the effective control and possession with respect to cranes given to Bhopal Municipal Corporation (MCB) was not with the appellant. The appellant gets paid a fixed price per crane from MCB. The activity was that of giving cranes on ‘Hire’ instead of it being wrongly classified as ‘Supply of Tangible Goods’.
The appellant/assessee, M/s Bhopal Crane Trading Company is a partnership firm engaged in the business of supplying cranes to Bhopal Municipal Corporation, Bhopal since the year 2005. Based on intelligence with the departmental officers, it was revealed that the appellant is neither registered nor is paying any service tax for the services being provided by them.
On perusal of the contract made between Bhopal Municipal Corporation and the appellant , the department observed that the appellant is supplying cranes to the Bhopal Municipal Corporation on a fixed monthly charge of Rs. 54,999/- per crane but has neither applied for service tax registration nor paid service tax on its taxable receipts.
The appellant provided the copy of partnership deed and the copy of bank statement of its account to the department instead of copies of P & L A/c, ITR and contract wise details of amount received by them against such activity during the period 2007-08 to 2010-11 as asked by the department.
The department observed that the services provided by the appellant would fall under the category of ‘Supply of Tangible Goods Service’ which has been made taxable w.e.f. 16.05.2008.
The ‘Supply of Tangible Goods’ is an activity made taxable w.e.f. 16.5.2008. As per Section 65(105)(zzzzj) this activity means any service provided or to be provided to any person, by any other person in relation to supply of tangible goods including machinery, equipment and appliances for use, without transferring the right to possession and effective control of such machinery, equipment and appliances.
The tribunal while allowing the appeal, held that appellant has not collected any tax from Municipal Corporation Bhopal on the invoices raised to MCB. The demand is held to have been wrongly confirmed.
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Case Details
Case Title: M/s. Bhopal Crane Trading Co. Versus Commissioner of Customs
Case No.: Service Tax Appeal No. 50352 of 2016 [DB]
Date: 17.01.2025
Counsel For Appellant: Sandeep Mukherjee
Counsel For Respondent: Harshvardhan
