SHRI SAI RMC vs COMMISSIONER, CENTRAL EXCISE & CGST-ALWAR

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH, COURT NO.3

SERVICE TAX APPEAL NO.51146 OF 2022

[Arising out of Order-in-Appeal No.349(SM)/ST/JPR/2021 dated 18.11.2021 passed
by the Commissioner (Appeals), Central Excise & CGST, Jaipur]

M/s. Shri Sai RMC Appellant
Jonayacha Mod, Shahjahanpur,
Distt.-Alwar (Raj.)-301705


Vs.



Assistant Commissioner, Central Goods &
Respondent
Service Tax Division-E, Behror (Alwar)


Appearance:
Present for the Appellant: None
Present for the Respondent: Shri M.M. Rahman, Authorised Representative

CORAM:
HON'BLE MR. AJAY SHARMA, MEMBER ( JUDICIAL )
HON’BLE MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL)

Date of Hearing : 06.10.2026
Date of Decision:16.10.2026

Final Order No.51616/2026

HEMAMBIKA R. PRIYA
1
The present appeal has been filed by M/s. Shri Sai RMC , against
the Order-in-Appeal No.349(SM)/ST/JPR/2021 dated 18.11.2021
passed by the Commissioner (Appeals), Central Excise & CGST, Jaipur
confirming the demand of service tax amounting to Rs.2,89,224/-
along with interest and penalty .

1. The Appellant

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2. The brief facts are that the appellant was engaged in providing
taxable service i.e. Goods Transport Agency Service and was
registered with service tax department. During verification of third
party information, the department observed that the tax deducted at
source (TDS) for the year 2012-13 was Rs.27,31,350/-. In order to
ascertain the facts, documents were sought from the Appellant for the
Financial Year 2012-13 to 2015-16. The Appellant provided the 26AS.
On scrutiny of ST-3 returns filed by the Appellant, it was noticed that
the Appellant had paid service tax only on GTA Service and on
Manpower recruitment/supply service' under RCM. As per 26AS, TDS
had been deducted under Section 194 C and 194 I of the Income Tax
Act i.e. under the head of 'payment to contractors and 'renting of
immovable property. Therefore, it appeared that the appellant had not
paid Service Tax amounting to Rs.11,84,194/-. A Show Cause Notice
dated 28.03.2018 was issued to the Appellant, proposing therein
recovery of Service Tax amount of Rs.11,84,194/- alongwith interest
under proviso to Section 73(1) and Section 75 of the Act respectively,
Imposition of penalty under Section 77(1)(c) and 78 of the Act, was
also proposed. The adjudicating authority vide Order-in-Original dated
07.08.2020 confirmed the demand of Rs.19,047/- against job work
done by the Appellant, Rs.2,89,224/- against hiring charges for TM
Machine and Rs.26,100/- against renting of immovable property (total
Rs.3,34,371/-) alongwith interest, penalty of Rs.3,34,371/- under
Section 78 and of Rs.10,000/- under Section 77(1)(c) was imposed.
Being aggrieved with the said Order-in-Original dated 07.08.2020, the
Appellant filed an appeal before the Commissioner (Appeals). The

3


Commissioner (Appeals) vide Order-in-Appeal dated 18.11.2021
dropped the demand of Rs.19,047/- confirmed on the amount received
from sale of ready mix concrete, holding that the Appellant was not
required to pay Service Tax on the RMC cleared on job work basis. As
regards the Service Tax of Rs.2,89,224/, the Commissioner (Appeals)
noted that the Appellant had already paid amount of Rs.72,306/-
alongwith interest of Rs.4,140/- on receipt of Rs.23,40,000/- towards
"Transportation of Goods by Road Service”. The impugned order has
held the Appellant was liable to pay Service Tax on full amount
received against hiring of Transit Mixture Machine, and upheld the
demand of Service Tax amounting to Rs.2,89,224/-.
3. No one appeared on behalf of the appellant despite several
opportunities. In the hearing on 14.07.2026, the appellant was
warned of the last opportunity. However, when the case was called
out, no one appeared nor any request for adjournment had been
received. Hence, we have taken up the case for final hearing by
taking into consideration the grounds mentioned in the Appeal memo.
3.1. The appellant has submitted that the order of the Appellate
Authority is not based on the facts of the case hence illegal and bad in
the eye of the law. It has been further submitted that the Appellate
Authority had ignored the fact that the vehicles were provided for
freight on payment, and the control of the vehicles was not handed
over. It has been also stated that the adjudicating authority had
wrongly interpreted the service and confirmed the tax amount of
Rs.2,89,224/- and penalty. The Appellant had correctly charged the

4


tax and deposited the same by claiming the benefit of the notification
issued for Goods Transport Agency. The Appellate Authority had also
erred in imposing the penalty amount of Rs.10000/- under section
77(1)(c) of the Act.
4. Learned authorized representative for the Department reiterated
the findings given in the Order-in-Appeal. He submitted that the
Appellant had paid Service Tax of Rs.72,306/- along with interest of
Rs.4,140/- on receipt of Rs.23,40,000/- classifying the service as
"Transport of goods by road service'. M/s Sai Nath RMC had issued
letter for requisition of 2 TM machines from the Appellant for
transportation of RMC on amount of Rs.3,90,000/- per month. He
stated that it is mentioned in the letter that the Driver's maintenance
and diesel would be within the scope of the Appellant. He contended
that this type of contract was transfer of right to use the vehicle,
rather than providing service of transportation and is classifiable under
supply of tangible goods. Further, learned authorized representative
submitted that the Appellant had not produced any evidence before
the adjudicating or appellate authority to show that the consignment
notes were issued by him. Thus, the appellant was liable for payment
of Service Tax on full amount received against renting of Transit
Mixture machines.
5. We have heard Shri M.M. Rahman, learned authorized
representative for the Department. No one appeared on behalf of the
appellant.

5


6. In order to appreciate the submissions, we need to look at the
findings in the impugned order:
“7.1 As regard demand of Service Tax amounting to Rs.
2,89,224/-, I observe that the appellant has paid an amount of
Rs.72,306/- along with interest of Rs.4,140/- on the receipt of
Rs. 23,40,000/- in this regard, classifying the service as
Transport of goods by road service. The adjudicating authority
has confirmed the demand on the ground that the appellant did
not provide any document for classification of the service and the
service provided by the appellant falls under 'supply of tangible
goods service. I find that the appellant has produced copy of
letter issued by M/s Sai Nath RMC, to whom the appellant
provided TM machines for transportation of RMC. I find that the
letter was issued for requisition of 2 TM machines, for which an
amount of Rs.3,90,000/- per month. It is mentioned in the letter
that scopes of Driver's, maintenance and diesel shall be in the
scope of the appellant.
7.2 I find that in the case of Birla Ready Mix Vs. Commar of C.
Ex., Noida, [2013 (30) S.T.R. 99 (Tri. - Del.)], the Honble
CESTAT has held that this type of contract is one for transfer of
right to use the vehicle rather than for providing service of
transportation. Gist of the judgment is as under-
………..
………
7.3 I find that the appellant has not put forth any evidence to
show that consignment notes were issued by him in this regard.
Thus, in the light of the above judgment, I hold that the service
does not fall under transport of goods by road service and the
appellant is liable for payment of Service Tax on the full amount
received against hiring of Transit Mixture machines. However, the
amount already paid is liable to be appropriated.”
6.1 We note that the supply of Tangible Goods was introduced in
2008. We note that the definition of the service as per Section 65
(105) (zzzzj) of Finance Act is as follows:

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“Taxable Service” means any service provided or to be provided
to any person, by any other person in relation to supply of
tangible goods including machinery, equipment and appliances
for use, without transferring right of possession and effective
control of such machinery, equipment and appliances."


As per the above definition, the decisive question is not merely
whether the goods were physically handed over, but the test is
whether the contract transferred both, Right of possession and
Effective control over the goods. The issue is a question of fact, which
is to be determined from the Agreement and the actual manner of
operation. The relevant factors to be considered would be, control,
deployment, operation, maintenance, movement, licences, personnel
and the permitted use of the equipment. A transfer of the right to use
goods generally requires the user to obtain effective control and the
ability to use the goods to the exclusion of the supplier during the
agreed period. Merely allowing a customer to use equipment while the
supplier retains operational control does not ordinarily amount to such
a transfer. In the instant case, it is evident that the appellant had
transferred the right to use the vehicle.
7. We note that the learned authorized representative relied on the
Supreme Court judgment in M/s. K.P. Mozika vs. ONGC in C.A.
No.3458/2017 dated 09.01.2024 wherein the Hon’ble Apex Court had
examined whether by hiring of motor vehicles/cranes, there is a
transfer of right to use any goods. In the said case, the Apex Court
had examine the question as to whether hiring cranes, trucks, trailers,
tankers and similar vehicles to ONGC and IOCL involves a "transfer of
the right to use goods", which is a deemed sale under Art.

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366(29A)(d) and s. 2(43)(iv) of the Assam VAT Act, or a service. The
appeals arose from Gauhati High Court judgments (25.11.2009 and
others) that held these contracts to be deemed sales. The Court read
s. 65(105)(zzzzj) of the Finance Act, 1994 (in force from 16.5.2008)
as covering supply of tangible goods for use without transfer of
possession and effective control. It held that where substantial control
stays with the contractor, there is no transfer of the right to use and
the transaction is a service. The relevant paras are reproduced
hereinafter:
“41. Now, at this stage, we may refer to Section
65(105)(zzz.z)) of the Finance Act, which was brought into force
with effect from 16" May 2008. Section 65(105)(zzzzj) reads
thus:
" Section 65. Definitions -………….
(1) ..
……….
(105) "Taxable service" means any service provided or to be
provided -
(a) ..
………
(zzzzj) to any person, by any other person in relation to
supply of tangible goods including machinery, equipment and
appliances for use, without transferring right of possession
and effective control of such machinery, equipment and
appliances."
It provides that "taxable service" means any service
provided to any person by any other person in relation to the
supply of tangible goods, including machinery, equipment and
appliances for use without transferring the right of possession
and effective control of such machinery, equipment and
appliances.
42. Essentially, the transfer of the right to use will involve not
only possession, which may be granted at some stage (after
execution of the contract), but also the control of the goods by
the user. When the substantial control remains with the

8


contractor and is not handed over to the user, there is no
transfer of the right to use the vehicles, cranes, tankers, etc.
Whenever there is no such control on the goods vested in the
person to whom the supply is made, the transaction will be of
rendering service within the meaning of Section 65(105) (zzzzj)
of the Finance Act after the said provision came into force.”

8. In the instant case, it is an admitted fact that the appellant
provided TM Machines for transportation of RMC, and the requisition
letter clearly states that the Driver, maintenance of the vehicles and
cost of the diesel would be undertaken by the appellant. The
impugned order has noted that no evidence has been submitted that
the appellant was providing GTA service. Even before the Tribunal, no
such evidence has been led by the appellant. Hence, we find that the
appellant’s case is squarely covered by the Apex Court judgement
supra.
9. In view of the above, we find no infirmity in the impugned order
and we uphold the same. Consequently, the appeal stands dismissed.
(Order pronounced on 16.10.2026 )

(AJAY SHARMA)
MEMBER ( JUDICIAL )



(HEMAMBIKA R. PRIYA)
MEMBER (TECHNICAL)



Archana