A service transaction occurs, rather than a transfer of the right to use goods, when effective control, possession, maintenance, and operational responsibility remain with the service provider. Such transactions are taxable where the recipient merely gains permissive use of the equipment for contract fulfillment.

Per: Shri Ajayan T.V.

Alex Bharat Raja, the appellant herein, has assailed the Order-in-Original No. 10/Commr/ST/2016 dated 13.07.2016 (impugned order).

2. The relevant facts as emanating from the SCN are that, the appellant is a holder of service tax registration certificate for providing taxable services under the category of “supply of tangible goods service” and “transportation of goods by road service”. The appellant is also engaged in providing “Erection, Commissioning or installation service”. Acting on intelligence that the appellant had provided taxable services and received payments but had not discharged service tax thereon, the officers of the Department initiated an enquiry by way of issuing letters/summons. In response to the enquiry, the appellant provided copies of financial records, such as Form 26AS statements, IT return acknowledgements, along with Profit and Loss Account and Balance Sheet, as well as sample copies of agreements/ work orders, service tax paid invoices, etc. In the course of such enquiry, a statement was also recorded from the appellant wherein he has stated that he is providing “Transport of goods by road” and “Supply of tangible goods” services and provided a list of his service receivers. The appellant has deposed that he had collected service tax from his service receivers in respect of supply of tangible goods services but not in respect of transport of good services. He has also deposed that due to shortage of funds he had not paid the service tax in full and further the service receivers had also not paid the amounts due to him in time and that he had filed the ST-3 returns only for the year 2012-13. On perusal of the records produced by the appellant, the Department was of the view that the appellant has provided taxable services under the categories “Supply of Tangible Goods Services” (SOTGS), and “Erection, Commissioning or Installation Services” (ECIS) for the period from 2009-10, (October 2009 to March 2010), to 2013-2014. Though it was noticed that the appellant has obtained Service tax registration under the category of “Transportation of goods by road service”, the Department was of the view that the transportation of cranes etc. is only part of the main services provided by the appellant and the same does not merit separate classification. Further, it appeared that no consignment note has been issued by the appellant mentioning freight charges and hence the service provided by the appellant fell under supply of tangible goods service. Alleging thus, the Department issued an SCN dated 20.04.2015 working out the tax liability on the basis of the Form 26AS statements and the Profit and Loss accounts that were produced. The notice invoked extended period of limitation on the allegation that the appellant had willfully suppressed the facts of providing taxable services and also had not filed ST-3 returns and had the taxable transactions been not brought to light by accessing third party data, the Department would have lost substantial revenue. Proposals were made to impose penalties and also for appropriation of an amount of Rs.14,35,301/- paid by the appellant. After due process of law, the Adjudicating Authority confirmed the demand of Service tax along with applicable interest, appropriated the aforesaid amount paid to