Alex Bharat Raja Vs Commissioner of GST & Central Excise (CESTAT Chennai)
Conclusion: Appellant’s activity of providing trailers along with drivers, crew, fuel, insurance and retaining effective control and possession thereof was appropriately classifiable under the category of “Supply of Tangible Goods Service” and not under “Goods Transport Agency Service”. Consequently, the demand of service tax, interest and penalties, as confirmed by the Adjudicating Authority, was sustainable in principle, including the invocation of the extended period of limitation.
Held: Assessee-proprietor of Friends Road Carriers, was engaged in providing services involving trailers and heavy machinery movement. Department found that he had provided taxable services and received payments without fully paying service tax. Appellant treated the activity as Goods Transport Agency service. He argued that he transported heavy machinery like cranes and accessories by road using his trailers and hired trailers. According to him, service tax on GTA service was payable by the recipient under the applicable reverse charge notifications. Revenue disagreed with the same. It examined work orders and found that the activity was described as “Hiring of Trailer”. The work order showed that hire charges included fuel, crew, food and accommodation. Appellant was also responsible for insurance, driver, safety compliance, vehicle documents and repairs in case of breakdown. Appellant argued that the issue was only of classification and based on interpretation of law. He also argued that no extended period could be invoked. He further argued that the department had not properly examined whether right to use the trailer was transferred. Revenue argued that possession and effective control always remained with the appellant. It said the service recipient only used the trailer for its work, while the appellant retained operational control through driver, crew, fuel and maintenance responsibility. It was held that supply of Tangible Goods Service applies when goods are supplied for use without transfer of possession and effective control. Tribunal found that the trailer was used by the service recipient, but the control stayed with the appellant. It observed that the appellant provided the driver, fuel, crew and was responsible for repairs and insurance. This showed that there was no transfer of right to use the trailer. Tribunal rejected GTA classification, especially as the appellant had not issued consignment notes. It upheld the classification as Supply of Tangible Goods Service. The matter was remanded only for limited verification of cum-tax benefit, Cenvat credit and actual receipts.
