Universal Distributors Vs C.C.E & S.T-Vadodara-I (CESTAT Ahmedabad)
Summary: CESTAT Ahmedabad allowed the appeal of Universal Distributors and set aside the service tax demand of Rs. 8,44,162/- raised for October 2016 to June 2017 under the category of “supply of tangible goods service”. The appellant had been recovering charges for trucks fitted with Hydrogen Cylinder Skids supplied to M/s. Raj & Company. Under the MOU, rent was charged per trip, with separate skid rent linked to NM3 capacity/trips. The Department considered the receipts taxable as supply of tangible goods service and alleged that the appellant had neither obtained service tax registration nor paid tax or filed ST-3 returns for the activity. The show cause notice also proposed interest under Section 75, penalties under Sections 76 and 77(1)(a) of the Finance Act, 1994 and late fee under Rule 7C of the Service Tax Rules, 1994 read with Section 70.
The adjudicating authority confirmed the tax demand and consequential liabilities, and the Commissioner (Appeals) upheld the order. The source identifies the Order-in-Appeal as dated 20.12.2019 in the introductory particulars and again in paragraph 6, while paragraph 1.3 records the impugned order as dated 28th December, 2019. The appellant contended that the entire vehicle fitted with the Cylinder Skid had been handed over to the customer, which used and maintained the vehicles at its own responsibility and labour and bore the expenditure connected with them. It relied upon Section 65(105)(zzzzj) of the Finance Act, 1994, under which supply of tangible goods was taxable where the right of possession and effective control were not transferred, and argued that its transaction did not satisfy those conditions. Reliance was also placed on Kinetic Communications Ltd Vs. C.C.E., Pune-I. During hearing, the appellant pointed out that four earlier show cause notices involving the same issue had already reached the Tribunal.
