Renting of Truck not amounts to Supply of Tangible Goods Service

M/s Satish Kumar & Co. Vs Commissioner of Central Excise (CESTAT Mumbai)

The facts of the case are that the appellant are registered under the provisions of Finance Act, 1994 with Service Tax Office, Nagpur under the service categories of “Advertising Agency”, “Business Auxiliary Services” and “Insurance Auxiliary Service”. During the departmental audit for the period from July, 2008 to February, 2011 and March, 2011, it was revealed that the appellant have not paid Service Tax under the category “Supply of Tangible Goods Service” amounting to Rs. 3,96,284/- on rent received from specially designed trucks rented to Jaika Automobiles and Finance Pvt. Ltd., Raipur. The case of the department is that the renting of trucks to the lessees is the service falls under supply of tangible goods therefore it is liable to Service Tax under the category of “Supply of Tangible Goods Service”. The adjudicating authority confirmed the demand and the learned Commissioner (Appeals) upheld the same, therefore the appellant are before us.

2. Shri Shailendra Jain, learned Counsel appearing on behalf of the appellant submits that the show-cause notice dated 17.10.2013 was issued for the demand pertaining to the period 2008-09 to 201011, accordingly the extended period was invoked while confirming the demand, however there was no whisper regarding the ingredient required to invoke proviso to Section 73(1) of Finance Act, 1994. Even in the proposal of the show-cause notice the demand was raised under Section 73 and not under proviso to Section 73(1), therefore in absence of any charge of suppression, fraud, collusion, misstatement, etc., the demand for longer period is time bar. Since the entire period is beyond the normal period of one year of the show-cause notice, it is required to be set aside being time bar. As regard merit of the case, he submits that the appellant have rented out the trucks to the various lessees without driver and no any other facility provided by the appellant, therefore after renting out the trucks the effective control transferred to lessees. Therefore, the service per se does not fall under the category of “Supply of Tangible Goods Service”, hence the same is not taxable under the said head. He placed reliance on the judgment of this Tribunal in the case of Praveen Engineering Works Vs. Commissioner of Service Tax, Raigad – 2014 (33) STR 719 (Tri.-Mumbai).

2. Shri Atul Sharma, learned Assistant Commissioner (A.R.) appearing on behalf of the Revenue reiterates the finding of the impugned order. He further submits that the judgment relied upon by the learned Counsel in the case of Praveen Engineering Works (supra) has been dealt with by the adjudicating authority and the same was not given credence for the reason that the matter was remanded to the adjudicating authority for fresh adjudication, therefore the said judgment did not decide the issue finally.

3. We have carefully considered the submissions made by both sides and perused the records. We find that the Revenue has demanded the Service Tax on the renting of trucks under the head of “Supply of Tangible Goods Service”. As per the facts of the case which is not in dispute, we note that the appellant have given the trucks to the lessees on monthly rental charges. The appellant did not provide any facility such as driver, repair and maintenance, fuel etc. Once the truck is rented out the entire possession and control is of the lessees and during the renting period there is no interference of the appellant. The adjudicating authority analyse the legal provision which is given in para 5.7 is reproduced below:-

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