2026-VIL-937-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax - Supply of Tangible Goods Service - Classification of trailer hiring services - Whether hiring of trailers with crew and equipment, where possession and effective control remain with service provider, constitutes supply of tangible goods service under Section 65(105)(zzzzj) of Finance Act, 1994 or GTA service – HELD - The essential ingredients for attracting the definition of taxable service under Section 65(105)(zzzzj) are: provision of service by one person to another in relation to supply of tangible goods including machinery, equipment and appliances, with no transfer of right of possession, effective control continuing with service provider, and goods supplied for use by recipient. The term "use" does not require physical operation or technical expertise but signifies application of goods for the purpose for which they are supplied under contract terms. The work orders examined establish that the service provider supplied trailers on hire charge basis inclusive of fuel, crew, and accommodation, with service provider responsible for insurance, maintenance, repairs, crew compensation, and health and safety compliance, retaining comprehensive control over equipment throughout contract period. This constitutes license to use goods without transfer of right to use, falling within Section 65(105)(zzzzj) – The Section 65(105)(zzzzj) was enacted precisely to levy service tax on such “licence to use” that goes in tandem with the tangible goods supplied, where right of possession and effective control are not transferred to the service recipient. The Adjudicating Authority's findings that services are classifiable as supply of tangible goods service and not goods transport agency service are upheld, as requirement of consignment note under Rule 4B is not applicable where possession and control are retained by service provider. The terminology of "hire charges" versus "freight charges" in balance sheet does not alter actual nature of service when work orders clearly indicate hiring of equipment on lump sum basis without transfer of possession or control - the appellant are covered under “Supply of Tangible Goods services”, the reliance placed by the appellant on the decisions in support of its contention that it is covered under GTA service inapplicable and distinguishable - While the appellant is entitled to cum-tax benefit as well as computation of cenvat credit entitlement, it needs to be verified whether the liability has been correctly discharged - The appeal is disposed of by remandrnrnDemand invoking the extended period of limitation – HELD – The ST-3 returns were filed erratically and that too indicating partial discharge of liability is not controverted. There is no claim of bonafides nor even a plea that the liability has been declared in the ST-3 returns correctly, though discharged partly, to show that there was no intent to evade payment of service tax. Concededly the ST-3 returns itself have not been filed for the entire disputed period, save for 2012-13. There has been no contest to the findings of the Adjudicating Authority regarding invoking the extended period of limitation either in the reply of the appellant or in the grounds of the appeal preferred before us. In these circumstances, there is no substance in the claim that it was only issues of interpretation and that therefore the extended period of limitation cannot be invoked. Therefore, no reason to interdict the findings of the Adjudicating Authority on this aspect of invoking extended period of limitation - While the appellant is entitled to cum-tax benefit as well as computation of cenvat credit entitlement without invoking the bar prescribed in Rule 4(1), it needs to be verified whether the liability has been correctly discharged.
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