Order Date: 14 November 2022

Facts:

• The appellant, Perfect Ready Mix Concrete, has entered into a contract with the buyer of RMC which is of works contract which includes a supply of RMC and laying of RMC at the buyer’s site.
• Appellant also filed VAT returns under (Form -202) section 14A of Gujarat VAT Act, 2003 after taking permission under Rule, 28 of the Gujarat VAT Rules.
• On scrutiny of Balance Sheet it also appears that they received rent income on account of transfer of tangible goods service and received legal services, on which the applicant is liable to pay service tax.
• A show cause notice dated 23-12- 2020 was issued and the impugned order-in-original dated 03-11-2021 came to be passed wherein it was held that activity of the appellant i.e. supply of RMC at buyer’s site is classifiable as Works Contract service.
• The demand of service tax amounting to Rs. 2,22,53,396/- for the period April 2015 to June 2017 was confirmed and Service tax demand of Rs. 5,990/- was also confirmed on legal service under reverse charge under Section 73 of Finance Act, 1994. Interest under Section 75 was demanded and penalties were imposed on the appellant.

Issue:

• Whether the appellant is liable to pay service tax in the instant case ?

Order:

• The authorities find that the entire case of the department is based only on the contract between appellant and buyer of RMC.
• As per the contract, the entire transaction is of Works Contract. However, the appellant is mainly engaged in the manufacture of Ready-Mix-Concrete and selling the same to various buyers. As per the nature of product, it is necessary to supply RMC in a specialized container and after reaching at the customer’s site RMC is delivered by carrying out the process of pouring, pumping and laying of concrete at the customer’s place.
• The appellant is treating the transaction of Works Contract in terms of VAT Act only.
• Tribunal Delhi in the case of GMK Concrete Mixing Pvt. Ltd. v. CST, has held that the entire exercise is sale of ready-mix-concrete and there is no service element involved so as to create service tax liability against the assessee.
• The authorities were of the clear view that the activity of the appellant is predominantly of manufacture and sale of goods. Accordingly, the same cannot be charged with service tax under Works Contract service.
• It would go to show that the amount related to the supply of tangible goods service is within the threshold limit of exemption of service tax provided under the Notification 33/2012-ST. dated 20.06.2012.
• The appeal is allowed with consequential reliefs, if any, in accordance with law.