Bus Meant For Carrying Passengers, Can't Be Called Means Of Transport Of Goods, Service Tax Payable: CESTAT
Mariya Paliwala
20 May 2024 7:00 PM IST
The Delhi Bench of Customs, Excise and Service Tax Appellate (CESTAT) has held that service tax is payable on buses meant for carrying passengers and cannot be called means of transport of goods. The bench of Binu Tamta (Judicial Member) and Hemambika R. Priya (Technical Member) has observed that on the applicability of the benefit of exemption under Clause 22(b) of the Notification...
The Delhi Bench of Customs, Excise and Service Tax Appellate (CESTAT) has held that service tax is payable on buses meant for carrying passengers and cannot be called means of transport of goods.
The bench of Binu Tamta (Judicial Member) and Hemambika R. Priya (Technical Member) has observed that on the applicability of the benefit of exemption under Clause 22(b) of the Notification No. 25/2012-ST, the authorities took a very hypothetical view to say that the appellant had booked the income from the above service under the heads of 'parcel service' and 'postal mail service' and not under the 'hire charges'. The fact is that the agreement here does not speak of parcel or postal mail service. The agreement is clear that the purpose of it is to make available the space on the roof of the buses to M/s Sai Marketing & Loading Co., which is hiring for space for a license fee.
The appellant/assessee is an autonomous body established under the Road Transport Corporation Act, 1950, of Rajasthan and is the sole government public transporter engaged in the state, operating a large number of buses of various categories. The appellant entered into an agreement with Sai Marketing & Loading Company, Jalgaon, for providing open space in the carrier of buses for which they were charging the license fee on a monthly basis.
A show cause notice was issued for the period April 2012 to March 2015, as the appellant had provided space on the roof of buses for transportation of parcels and goods from one designated bus depot to another and also the space provided at the bus depot for storage of such parcels. Consequently, demand was raised. The adjudicating authority dropped the demand for the period April 2012 to March 2014 as being time-barred; however, it upheld the demand of Rs. 9,10,796 for the period April 2014 to March 2015. On appeal by the appellant, the order was affirmed.
The department contended that, as per the agreement, only the space on the roof of the buses has been given on hire and not the means of transportation that is the bus,, as the bus is primarily meant for carrying passengers and therefore cannot be called a means of transporting goods. Moreover, the appellant has booked their income under 'parcel service' and 'postal service' and not under 'hire charges'.
The tribunal noted that a bare reading of Clause 22 shows that it covers services by way of giving on hire, and considering the purpose of the agreement between the two, it is applicable to the present case. Sub-clause (a) of Clause 22 is not applicable in the facts here, but the bench found that as M/s Sai Marketing & Loading Co. is a goods transport agent to whom the open space has been given on hire for transportation of goods or parcels, sub-clause (b) of Clause 22 applies as it speaks of hire to a goods transport agency, a means of transportation of goods. The exemption provided in Clause 22 covers the activity, and therefore, the appellant is not liable to pay the service tax.
The ITAT noted that the authorities below have dealt with the issue in a very superficial manner, as they have taken into consideration only the definition of'service'' as per Section 65B(44), which states that any activity carried out by a person for another for consideration is covered by the definition of “service,” and since the appellant was not engaged in the transportation of goods by road service, the service provided was not covered by Clause (p)(i) of Section 66D.
The tribunal held that the bus, which is primarily meant for carrying passengers from one place to another, cannot be called the means of transport of goods, and therefore, the appellant is not eligible to claim exemption under Clause 22(b) of the notification. The findings are unsustainable.
Counsel For Appellant: Sameer Sood
Counsel For Respondent: S.K. Meena
Case Title: M/s. Rajasthan State Road Transport Corporation Versus Commissioner of Central Excise and Service Tax Commissionerate
Case No.: Service Tax Appeal No.52235 of 2018
