Whether Bunkhouses can be considered as the supply of tangible goods or not ?

PJ/Case Law/2018-2019/3484

Case: HOTEL KAILASH INTERNATIONAL Versus COMMISSIONER OF C. EX., JAIPUR-II
Citation: 2018 (12) G.S.T.L. 81 (Tri. - Del.)

Issue: Whether Bunkhouses can be considered as the supply of tangible goods or not ?
Brief facts:The appellant is aggrieved by the order dated 29-9-2011 of Commissioner (Appeals), Jaipur-II. The dispute in the present appeal is with reference to the liability to Service Tax for provision of bunkhouses by assessee for M/s. Cairns Energy India Pvt. Ltd., Barmer. The Revenue proceeded to demand Service Tax against the appellant considering the amount received under the category of supply of tangible goods service. It was held that the bunkhouses are goods which are supplied by the appellant for a consideration. Accordingly, Service Tax demand of Rs. 4,91,861/- was confirmed along with penalties. The Ld. Counsel submitted that in terms of service order received from the client, M/s. Cairns Energy India Pvt. Ltd. they have provided bunk-houses with all the required facilities at the site ear-marked by the client. Drawing our attention to the photographs of such bunkhouse facilities, it is submitted that first there is a concrete platform built by the appellant on which a row of bunkhouses were erected by assembly and integration for use by the client for accommodation of executives and employees. The service order clearly mentions that the bunkhouses which are semi-super deluxe for facility, are provided by the appellant along with incidental service of housekeeping, breakfast, dinner, etc.
Appellant’s contention: Applicant submits that the whole facility of bunkhouse is created at site and there is no ready built bunkhouse supplied by them.

Respondent’s Contention: The Ld. AR submitted that these are movable property easily moved from place to place depending on the requirement. These are supplied not in full assembled condition will not take away the liability from service tax for supply of tangible goods
Reasoning of Judgement: The nature of bunkhouses can be seen from the sample photographs submitted by the appellant. It is seen that in a concrete pavement, a row of accommodation facilities have been created at site. Admittedly, concrete and paver block flooring are to be made in the designated premises. Thereafter, the accommodation in the form of bunkhouse is assembled/ erected as per the requirement of the client. Additional facilities like washbasin, plumping, etc., are provided in the said facilities. It would appear that the whole bunk-house system integrated in row of accommodation with all connected facilities for the human habitation is created at site in the premises designated by the client. The service order identifies the payment as hiring of bunkhouse in Barmer. The crucial difference is that the appellant is claiming these accommodations created at site. The Revenue is claiming that these are tangible goods supplied by the client. Looking into the nature of construction and accommodation under the terms of service order, we are of the considered view that these bunkhouses are in fact created on concrete platform at site with various components and accessories and as such, there is no “supply of bunkhouse” to be called supply of tangible goods in the present arrangement. The bunkhouse accommodation is created at site based some on permanent concrete base with some dismantable components. In such situation, we note that there is no identified supply of bunkhouses as considered by the lower authorities. In fact, the exact nature of tangible goods supplied was not discussed by the lower authorities, except holding the whole consideration received for provision of bunkhouses will be considered as supply of tangible goods. As already reported, we are not in agreement with such finding. In view of the above discussion; we set aside the impugned order and allow the appeal.
Decision: The Advance Authority of Ruling allowed the application submitted by the applicant.
Comment: The analogy of the case, it is concluded thataccommodation of Bunkhouses is created at sites and concrete and paver block flooring are made in the designated premisesas per client’s requirement.However exact nature of supply of tangible goods is not explained by the department. As such there is no pre identified supply of bunkhouses because any changes can be made by the supplier. Thus, bunkhouses cannot be considered as Supply of tangible assets.
Prepared by: Pushpa Choudhary

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PJ/Case Law/2018-2019/3484

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