Provision of GTA service - when Tarformer transported in Assessee's own Truck?

PJ/Case Laws/2012-13/1006

Case: COMMISSIONER OF C. EX., LUCKNOW v/s TECHNICAL ASSOCIATES

Citation: 2012-TIOL-98-HC-ALL-ST

Issue:- Contract for repair and maintenance of transformer for which assessee transporting faulty transformer in their own truck – whether GTA service provided and service tax leviable on the same?

Brief Facts:- Respondent-assessee is engaged in rendering the services of maintenance and repair of transformers. They entered into an agreement with U. P. Power Corporation Limited for repair and testing of damaged Transformers stipulating that respondent had to lift the damaged Transformers and after repair, re-installed the same.

During scrutiny, the A. O. found that during the period from 01.04.2006 to 31.03.2007, respondent had lifted damaged Transformers by their own Trucks and charged the expense to U. P. Power Corporation Limited on account of “maintenance and repair” of old and damaged Transformers. The A.O. was of the opinion that on this amount, respondent was liable to pay service tax. Demand was raised against Respondent for the said period as well as for previous period i.e. 01.04.2003 to 31.03.2006 and for subsequent period i.e. 01.04.2007 to 31.03.2008. Demand was confirmed and penalty of Rs. 5000/- under Section 77 of the Finance Act, 1994 was imposed. Penalty was also levied under Section 78 of the Finance Act, 1994.

In appeal, the Commissioner (Appeal) set aside the demand and cancelled the penalties. Aggrieved by the same, Revenue filed appeal before the Tribunal. The Tribunal dismissed the appeal of Revenue.

Hence, Revenue is in appeal before the High Court.

Appellant’s Contention:- Revenue submits that transportation is a taxable service. Therefore, value of taxable service would include the cost of transportation and as such, the tax liability would arise on the total gross value paid on account of “repair and maintenance”. It was further submitted that transportation charges should be included in the gross value and as respondent has not paid service tax on the same, he was liable to pay tax with interest. And it was held also liable penal action as per Section 64(50b) of the Finance Act, 1994.

Reasoning of Judgment:- The High Court perused the terms and conditions of agreement entered between the respondent and U. P. Power Corporation Limited. It was noted that in the agreement it was stipulated that “rate for transportation/carriage are inclusive of loading, unloading, handling and insurance. And any loss/damage to transformers during transportation/carriage will be the responsibility of the contractor”.

The, High Court held that as per aforesaid stipulation, it appeared that it was the responsibility of the contractor to transport the defective transformers and any damage caused during transportation was charged from contractor. Further, it appears that the respondent has lifted the Transformers in his own truck and no services were taken from any transporter. The contract is only for repair and maintenance of the Transformers but without lifting the Transformers, repair is not possible. Thus, lifting and re-installation of the Transformers is an integral part of the repair, for which a contract was entered into between the respondent and U. P. Power Corporation Limited.

The High Court held that when Transformers have been transported in their own truck and no transportation charges were paid to any third party, then there is no question for charging the service tax as per Section 65 (50b) of the Finance Act, which states that ‘goods transport agency’ means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.

The High Court noted that in present case, no consignment note was issued and no services were taken from any third party for transportation of the Transformers. The lifting, repair and installation are the composite activities, for which the contract was signed between U. P. Power Corporation Limited and respondent. Neither transportation services were provided by third party nor any transportation charge was paid by the respondent to anyone. When it is so then no service tax is leviable as no transportation charges were paid by the respondent.

Thus, the High Court was of the view that transportation of the Transformers is an integral part of the “repair and maintenance”. Lifting and re-installation of the Transformers are necessary components of the “repair and maintenance” as long was it is not provided by the third party. No reason to interfere with impugned order of the Tribunal.

Decision:- Appeal dismissed.

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PJ/Case Laws/2012-13/1006

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