Custom, Excise & Service Tax Tribunal
Yogi Industries vs Vadodara-Ii on 23 April, 2024
Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench at Ahmedabad
REGIONAL BENCH-COURT NO. 3
SERVICE TAX APPEAL NO. 10076 OF 2023 - DB
(Arising out of OIO-VAD-EXCUS-002-COM-007-22-23 dated 12/10/2022 passed by
Commissioner of Central Excise, Customs and Service Tax-VADODARA-II)
YOGI INDUSTRIES ........Appellant
Plot No. 4725, GIDC Ankleshwar Industrial Estate,
Bharuch, Gujarat.
Versus
C.C.E. & S.T.-VADODARA-II ......Respondent
1st Floor... Room No.101, New Central Excise Building, Vadodara, Gujarat-390023.
Appearance:
Present for the Appellant :Shri Rahul Patel, Chartered Accountant Present for the Respondent: Shri Anoop Kumar Mudvel, Superintendent (AR) CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON'BLE MEMBER (TECHNICAL), MR. C L MAHAR Final Order No.10934/2024 DATE OF HEARING: 18.03.2024 DATE OF DECISION: 23.04.2024 RAMESH NAIR The brief facts of the case are that the appellant is engaged in the business of trading of chemicals i.e. Hydrochloric Acid ("HCL") and holding registration under the Gujarat Value Added Tax Act, 2003 vide No. 24211002096 and also holding registration under the Finance Act, 1994 vide No. AGCPM0040QST001. Appellant purchases the HCL from the manufacturers and sells to various buyers. Manufacturers supplies the HCL on ex-factory basis to the appellant and delivers at their plant in the tanker belonging to the appellant and then the same is being transported to the place of the buyer by the appellant.
1.1. During the course of audit of the records of the assessee by the officers of Central GST, it was observed that the appellant had received discount from the manufacturers against purchase of HCL exceeding the amount of the purchase price. Revenue had alleged in the show cause notice that a sample purchase invoice no. 03854 dated 16.10.2016
2|Page ST/10076/2023 -DB amounting to Rs. 102/- issued by the manufacturer namely M/s KLJ Organics Limited ( Unit-II ) revealed that the discount of Rs. 1660/- per MT was given to appellant against the purchase price of Rs. 10.21 per MT. Revenue found that the total amount of discount received by the appellant during the period 2016-17 to June, 2017 is Rs. 17,32,23,911/- which is exceeding the purchase price charged by the manufacturer. It is also found that the manufacturer was an excisable unit and charging the excise duty and VAT on the selling price, however not discharging excise duty or VAT on the discount given to the appellant. Revenue contended that the discount was the consideration for lifting/handling/removal/transportation carried out by the appellant and therefore liable to service tax which was not paid by the appellant and thus the demand was raised and order was passed against the appellant and against which the appellant is before us.
2. Shri Rahul Patel, learned Chartered Accountant appearing on behalf of the appellant submits that the appellant had entered into a transaction of purchase of HCL with the manufacturer and not other transaction involving provision of service was entered into by the appellant with the manufacturer. He further submits that the revenue has not brought on record any evidences suggesting any other transaction except that of sale of HCL by the manufacturer to the appellant. Transaction of purchase of HCL by the appellant on which the excise duty and VAT were charged and paid by the manufacturer was construed as services of lifting/handling/removal/transportation by the revenue which is factually as well as legally incorrect. He further submits that the contractual arrangement between Appellant and the Manufacturer explicitly outlines that the primary purpose is the sale of HCL. He referred to the copy of the excisable invoice and contract made in form of purchase order. He explained that contractual documentation establishes a clear mutual understanding and intention of both parties involved, focusing solely on the sale and purchase of goods. The integral part of this transaction is the transfer of ownership of HCL from the Manufacturer to Appellant, which then exercises its right to resell the chemical to other Buyers. The presence of any lifting or transportation activity is merely a logistical element necessary for executing the sale of goods. Such activities do not dominate the nature of the transaction nor do they alter its classification from a sale to a service. In essence, the contract between the two parties does not
3|Page ST/10076/2023 -DB envision the provision of a service by Appellant to the Manufacturer; rather, it stipulates a straightforward commercial transaction governed by the principles of sale of goods. The intention to engage in a sale, rather than provide a service, is evident and should be recognized as the transaction's predominant nature, reaffirming that the contractual intentions are aligned with the legal framework that distinguishes sales from services.
2.1 He further submits that the transaction in question is sale of goods, lacking the characteristics that would classify it as a provision of a service subject to service tax. The understanding and intentions derived from the contractual agreements between Appellant and the Manufacturer further reinforce this standpoint, urging for the dismissal of service tax, interest, and penalties as proposed in the Demand-Cum-Show Cause Notice. He invited attention to the list of important attributes of a transaction given in the reply made in response to the show cause notice:
i. Transaction between the Appellant and Manufacturer was limited to purchase and sale of HCL wherein the Appellant was a purchaser and Manufacturer was a seller;
ii. Appellant and Manufacturer had no privity of contract for any activity except purchase of HCL;
iii. Transfer of property in HCL undertaken at the premises of the Manufacturer;
iv. HCL was loaded by the Manufacturer in the vehicles of the Appellant;
v. Manufacturer and Appellant were acting on principal to principal basis;
vi. No transaction was entered into by the Appellant with the Manufacturer for provision of transportation or other services for and / or on behalf of the Manufacturer and which is no matter of dispute in the Notice;
vii. Buyers of the Appellant were neither identified by the Manufacturer nor known to the Manufacturer;
viii. Re-sale of HCL by the Appellant to other Buyers was an independent transaction than purchase of HCL from the Manufacturer;
4|Page ST/10076/2023 -DB ix. Amount of discount is completely market driven and subject to negative volatility;
2.2 In view of given facts, he explained that the said transaction is not to be regarded as 'service' as defined in clause (44) of section 65B of the Act.
He further submits, without prejudice, that in case the activity is to be deemed as service, same shall be construed as negative list service as per clause (e) of section 66D of the Act and thus tax is not payable. He explains that the services in relation to trading of goods is deemed as negative list services. In the case on hand, the appellant is merely engaged in trading of goods i.e. buying and selling of HCL and that fact is not disputed by the revenue. He thus submits that the services, if any involved in purchase of HCL, shall be treated as services in relation to trading of goods thus be deemed as negative list services.
2.3 He further submits, without prejudice, that in case the transaction is deemed as 'service' and falls outside the scope of clause (e) of section 66D, entry (p) of section 66D shall apply and thus the same be construed as negative list services. He submits that the amount of discount is, from the perspective of finance and commerce, is attributed to the cost of transportation and which fact is evident from the financial statements. Consequently, it is imperative to assert that the predominant activity subsequent to purchase of HCL which is involved, is that of transportation from the Manufacturer's location to the Buyer's premises, unequivocally characterizing this operation as the transportation of goods by road. This financial pattern not only highlights the logistical priority of transporting the purchased goods but also underscores the transaction's intrinsic nature as fundamentally cantered on the movement of goods, thereby reinforcing the argument against its classification under the service tax ambit.
2.4 It is evident from the other records including the copies of RC books available in the paper book, that the transportation of goods were carried out by Road and thus the transaction merits classification under clause (p) of Section 66D of the Act.
2.5 Regarding the GTA, he submits that revenue has not brought on record any evidence in form of a consignment note under which the
5|Page ST/10076/2023 -DB transportation would have been undertaken by the Appellant for the Manufacturer. Moreover, the appellant is not a GTA by any stretch of imagination and thus the activity shall be covered by clause (p) of section 66D of the Act. Alternatively, he further submits that the tax will not be payable by the appellant even if the appellant is regarded as GTA since the tax liability shall be on the consignor or consignee as per rule 2(1)(d) read with Notification No. 30/2012-ST dated 20.06.2012. He submits that the manufacturers are the specified persons as per rule 2(1)(d) and discount is the consideration, according to the revenue, it is the manufacturer who shall be liable to pay tax and thus the tax liability does not arise in hands of the appellant. Furthermore, he submits various other grounds and reasons to counter the allegations and contentions made in the impugned order including the ground of limitation of period provided in section 73 for issuance of show cause notice.
3. Shri Anoop Kumar Mudvel, Superintendent (AR) learned Authorized Representative appearing on behalf of the revenue reiterates the finding in the impugned order.
4. We have heard both sides and perused the records. The issue involved in the present case is whether the amount received by the appellant from the manufacturer of HCL in the form of a discount, exceeding the price paid by the appellant for the purchase of HCL, is taxable or not. As per the facts prevailing on records and argued by both sides, there is no dispute that there was no other transaction other than the purchase of HCL by the appellant from the manufacturers. We find from the copies of the invoices, purchase orders, and credit notes produced by the appellant, and also emanating from the impugned order, that the purchase of HCL by the appellant from the manufacturers was the sole transaction they had entered into and which was subject to scrutiny by the revenue in audit and adjudication. We also find that the discount given by the manufacturer to the appellant, which is subjected to tax by the revenue in the impugned order, was in relation to the same transaction of purchasing HCL by the appellant. We also find from the facts and records that the manufacturer would not have paid the discount if the appellant had not purchased the HCL from the manufacturer. We also find that the amount of the discount was agreed upon by the parties in the purchase
6|Page ST/10076/2023 -DB order, which is evident from the records. Therefore, we find that the discount was in respect of the purchase of HCL by the appellant but not relating to any other commercial transaction independent of and distinct from the purchase of HCL.
4.1 In order to decide whether the discount will attract the tax or not, it is necessary to decide whether the transaction entered into by the appellant with the manufacturer, in view of the above-stated facts, constitutes the subject of taxation under Section 66B of the Finance Act 1994. It is a settled legal position that while dealing with the levy of a tax, attention is to be paid to the subject matter but not to the amplitude or quantum of the subject matter. The quantum of the discount, whether exceeding the purchase price or not, shall be of no relevance while deciding the levy of tax on the given transaction. As per Section 66B of the Act, tax is levied on the provision of service which is defined in Clause (44) of Section 65B of the Finance Act 1994 as follows:
"(44) "service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include--
(a) an activity which constitutes merely,--
(i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or
(ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of article 366 of the Constitution; or
(iii) a transaction in money or actionable claim;
(b) a provision of service by an employee to the employer in the course of or in relation to his employment;
(c) fees taken in any Court or tribunal established under any law for the time being in force.
Explanation 1. -- For the removal of doubts, it is hereby declared that nothing contained in this clause shall apply to,--
(A) the functions performed by the Members of Parliament, Members of State Legislative, Members of Panchayats, Members of Municipalities and Members of other local authorities who receive any
7|Page ST/10076/2023 -DB consideration in performing the functions of that office as such member; or (B) the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity; or (C) the duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or State Governments or local authority and who is not deemed as an employee before the commencement of this section. Explanation 2. -- For the purposes of this clause, transaction in money shall not include any activity relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged.
Explanation 3. -- For the purposes of this Chapter,--
(a) an unincorporated association or a body of persons, as the case may be, and a member thereof shall be treated as distinct persons;
(b) an establishment of a person in the taxable territory and any of his other establishment in a non-taxable territory shall be treated as establishments of distinct persons.
Explanation 4. -- A person carrying on a business through a branch or agency or representational office in any territory shall be treated as having an establishment in that territory;"
4.2 From the perusal of clause (44), it is clear that the activity carried out by one person for another, but constituting merely a transfer of title in goods by way of sale, gift, or other manner, was excluded from the definition. From the clear and indisputable facts gathered from the records, it is clear that the activity between the appellant and the manufacturers was singular, i.e., the sale of HCL by the manufacturer to the appellant. It is also found from the copies of invoices issued by the manufacturer to the appellant that the excise duty was levied and charged by the manufacturer in the said activity. Therefore, we agree that the transaction between the appellant and the manufacturers was limited to the sale of goods, resulting in a mere transfer of title in goods, and thus falls within the exclusion provided in clause (44). From the facts, we also find that there was no other activity other than the selling of HCL by the manufacturer and purchasing that by the appellant. Therefore, it is to be decided that there
8|Page ST/10076/2023 -DB was no activity amounting to 'service' as per the meaning ascribed in clause (44) ibid. Since there is no activity falling within the definition of 'service,' no tax is levied under section 66B of the Act. We also find that the discount is an integral part of the transaction involving the sale of HCL, which is not regarded as 'service'; receipt thereof by the appellant cannot be taxed. It is pertinent to note that the tax under the Finance Act 1994 is not an Income Tax or cash transaction tax that can be levied on earning income or receipt of money. Merely because the discount was received by the appellant and the amplitude of the discount exceeded the purchase price is not enough to bring them within the fold of taxation under section 66B of the Act. The learned chartered accountant on behalf of the appellant explained that the amplitude of the consideration, i.e., positive or negative, is not determinative of the nature and class of the transaction and thus cannot solely decide whether tax is leviable or not. He explained with the help of an example that generally, the rate of interest is denominated in positive numbers; however, there are certain countries like Japan where the rate of interest is denominated in a negative number. Although there is a negative interest rate, it carries the same nature and characteristics as that of the interest rate. Similarly, the selling price of any goods can be denominated in positive or negative numbers, but that will not change the nature and characteristics of the underlying transaction. As the price of any goods in a perfectly competitive market is determined as per the balance of demand and supply, an increase or reduction thereof on a price scale is merely a reflection of the demand-supply imbalance. Similarly, a negative price is nothing but a significant deflection of the price below the zero point on a scale. Thus, a negative price alone is not determinative of the transaction at hand. Therefore, in view of the above and looking at the facts emanating from the records, we find that the discount granted by the manufacturers to the appellant is nothing but the negative price charged for the sale of HCL. In absence of any other distinct activity or transaction and since the discount is integral part of the transaction of sale of HCL which does not fall within the meaning of 'service', tax is not payable on the amount of discount received by the appellant. It is settled law in various judgments that any discount given by the seller to the purchaser in the course of sale of goods is not liable to service tax on the ground that the transaction is of sale and purchase of goods and not of any service. Some of the Judgments are cited below:
9|Page ST/10076/2023 -DB
i) Autobahn Enterprises Pvt. Ltd. Versus Commr. Of Service Tax, Mumbai-I, 2022 (56) G.S.T.L. 312 (Tri. - Mumbai) "6. From the decisions cited by Learned Chartered Accountant, we find that the dispute pertaining to discount offered to corporate customers has attained finality. In this connection, the decision of the Tribunal In Re : Toyota Lakozy Auto Pvt. Ltd., which has referred to the other two decisions, observing that :
'2. Separate appeals have been preferred against two orders-in-original pertaining to the period from July, 2004 to March, 2007 and from April, 2007 to March, 2011. The demands confirmed in the two appeals are ` 1,58,69,430/- and ` 1,57,12,236/-; the impugned order holds appellant liable to tax on commission earned on sale of cars, on facilitation charges collected from customers for registration of vehicles and commission foregone on loans marketed by appellant to customers. It is the contention of the appellant that these are not consideration leviable to tax and that, even if these are, the adjudicating authority has erred in computing the tax liability. As the issues in the two appeals are common, we dispose both by a common order.
3. Appellant contends that ` 81,35,813/- and ` 1,21,47,133/- for the two periods has been wrongly subjected to tax because the agreement between the appellant and M/s. Toyota Kirloskar Motor Limited is one of supply of vehicles by the latter on 'principal-to-principal' basis on which title and risk, as per Agreement, are passed on to appellant when the vehicles are excise cleared and placed on common carrier. Depending on order quantity, the manufacturer raises invoices after according discounts which are designated as commission/incentive merely as a management terminology. Learned Chartered Accountant for appellant places reliance in the decisions of the Tribunal in Jaybharat Automobiles Limited v. Commissioner of Service Tax, Mumbai [2015-TIOL-1570-CESTAT-MUM = 2016 (41) S.T.R. 311 (Tri.)], Sai Service Station Limited v. Commissioner of Service Tax, Mumbai [2013-TIOL-
1436- CESTAT-MUM = 2014 (35) S.T.R. 625 (Tri.)], Tradex Polymers Private Limited v. Commissioner of Service Tax, Ahmedabad [2014 (34) S.T.R. 416 (Tri. - Ahmd.)] and Garrisson Polysacks Private Ltd. v. Commissioner of Service Tax, Vadodara [2015 (39) S.T.R. 487 (Tri. - Ahmd.)]. In Re : Jaybharat Automobiles Limited, the Tribunal held that :
"6.5 On the appeal by Revenue on the issue of incentives received by the appellant from the car dealer, we find that the relationship between the appellant and the dealer is on a principal to principal basis. Only because some incentives/discounts are received by the appellant under various schemes of the manufacturer cannot lead to the conclusion that the incentive is received for promotion and marketing of goods. It is not material under what head the incentives are shown in the Ledgers, what is relevant is the nature of the transaction which is of sale. All manufacturers provide discount schemes to dealers. Such transactions cannot fall under the service category of Business Auxiliary Service when it is a normal market practice to offer 10 | P a g e ST/10076/2023 -DB discounts/institutions to the dealers. The issue is settled in the case of Sai Service Station (supra). Therefore, we reject the appeal of the department."
and In re Sai Service Station Limited it was held that "14. In respect of the incentive on account of sales/target incentive, incentive on sale of vehicles and incentive on sale of spare parts for promoting and marketing the products of MUL, the contention is that these incentives are in the form of trade discount. The assessee respondent is the authorized dealer of car manufactured by MUL and are getting certain incentives in respect of sale target set out by the manufacturer. These targets are as per the circular issued by MUL. Hence these cannot be treated as business auxiliary service."
xx xx xx
10. To enable a re-visit of the taxability of subvented amounts as well as the abovementioned accounting entries, we deem it appropriate that the matter be remanded to the original authority for deciding afresh on the last two issues. The other two issues are not the subject of this remand as they stand decided in favour of appellant.' offers valid precedent.
7. Accordingly, the demand of ` 3,70,994/-, along with interest, and penalty under Section 78 of Finance Act, 1994 fails to survive."
ii) Commissioner of S.T., Mumbai Versus Jaybharat Automobiles Ltd. - 2016 (41) S.T.R. 311 (Tri. - Mumbai) "6.5 On the appeal by Revenue on the issue of incentives received by the appellant from the car dealer, we find that the relationship between the appellant and the dealer is on a principal to principal basis. Only because some incentives/discounts are received by the appellant under various schemes of the manufacturer cannot lead to the conclusion that the incentive is received for promotion and marketing of goods. It is not material under what head the incentives are shown in the Ledgers, what is relevant is the nature of the transaction which is of sale. All manufacturers provide discount schemes to dealers. Such transactions cannot fall under the service category of Business Auxiliary Service when it is a normal market practice to offer discounts/institutions to the dealers. The issue is settled in the case of Sai Service Station (supra). Therefore, we reject the appeal of the department."
iii) Rohan Motors Ltd. Versus Commissioner Of Central Excise, Dehradun- 2021 (45) G.S.T.L. 315 (Tri. - Del.) 11 | P a g e ST/10076/2023 -DB "19. The demand of service tax in respect of the amount collected on account of bouncing of cheques and cancellation of orders is also not sustainable. These amount are penal in nature and not towards consideration for any service. In this connection reliance can be placed on the decisions of the Tribunal in Jaipur Jewellery Show v. C.C.E & S.T., Jaipur - 2016 (12) TMI 344 - CESTAT New Delhi = 2017 (49) S.T.R. 313 (Tribunal) and K.N. Food Industries (P.) Ltd. v. Commissioner of CGST & Central Excise, Kanpur - 2019-TIOL-3651-CESTAT-ALL = 2020 (38) G.S.T.L. 60 (Tri. - All.).
20. The issue relating to demand of service tax on income earned by the appellant from registration charges and number plate charges under BAS and freight expenses under GTA has also been decided in favour of the appellant in Rohan Motors Ltd. (supra)
21. The Learned Authorized Representative of the Department has, however, placed reliance upon a ruling dated March, 2019 of the Appellate Authority for Advance Ruling Maharashtra to contend that the amount collected towards bouncing of cheque charges amounts to supply of service, but Learned Counsel for the appellant has pointed out that the said order was rectified subsequently by the Appellate Authority for Advance Ruling Maharashtra in its order dated December 12, 2019 [2020 (41) G.S.T.L. 651 (App. A.A.R. GST - Mah.)] and it was held."
iv) Prabhakar Marotrao Thaokar & Sons Versus Commr. Of C. Ex., Nagpur- 2019 (20) G.S.T.L. 294 (Tri. - Mumbai) "4. On careful consideration of the submissions made by both the sides and on perusal of records. We find that as per the agreement particularly the following clause :
"5. The Wholesale Distributor shall sale the goods at the price as determined by the Manufacturer. It shall not charge anything extra over and above the said price. The Manufacturers shall not be responsible for any loss of goods after it leaves the factory premises. Wholesale Distributor would be the owner of the goods once same are supplied to them by the manufacturer from the factory gate and the Wholesale Distributor shall take possession of the goods from the factory gate and shall transport the same to its godowns at its own expenses."
It is observed from the above para that after supply of goods by the manufacturer the ownership of goods is transferred to the wholesale distributor who is the appellant here. The sales invoice raised by the manufacturer is scanned below :
12 | P a g e ST/10076/2023 -DB From the agreement coupled with the above invoice it can be seen that the transaction between the manufacturer M/s. Gunaji and the appellant is clearly of sale.
In the invoice the manufacturer has charged 20% VAT the transaction is clearly at arms length hence sale transaction on principal to principal basis. From the invoice, it is also observed that a trade discount was passed on by the manufacturer to the appellant. As per this undisputed fact once, the transaction is of sale there is no relationship of service provider and service recipient between the manufacturer and the buyer (the present appellant). Accordingly, the discount passed on by the manufacturer to the appellant cannot be construed as a commission and the same is not the subject matter of levy of service tax. It is further seen that the appellant also, after purchase of goods from the manufacturer further sold to various traders. A copy of the sale invoice issued by the appellant is scanned below :
13 | P a g e ST/10076/2023 -DB From the above invoice it can be seen that it is clearly a sale invoice under which the appellant also paid the VAT. This shows that the transaction from the manufacturer to the appellant and subsequent from appellant to the individual traders are clearly sale transactions. Hence no service is involved. As per the above facts, we are of the clear view that a trading margin cannot be subject matter of levy of service tax. Accordingly, the impugned order is set aside and the appeal is allowed."
4.3 The appellant has further contested, without prejudice to primary ground of non-taxability, that the tax was not payable even if the discount is deemed as consideration for the provision of service. In such a case, without prejudice to the foregoing, it is necessary to determine the nature of the service. According to the revenue, the service is that of lifting/handling/transportation HCL from the manufacturer. It was also contended that HCL is a hazardous commodity and disposal of which was difficult for the manufacturer, and therefore they had paid the discount to the appellant for lifting it. In such a case, the entire transaction shall be deemed to be that of lifting HCL, and thus the sale of HCL will lose the characteristic of its dominant nature. However, the nature of the transaction emanating from the contract entered into by and between the manufacturer and the appellant does not speak out the same as explained by the revenue. Furthermore, the revenue has not challenged the payment of excise duty and VAT made by the manufacturer on such transaction. If the entire transaction is to be regarded as a supply of services of lifting the goods by the appellant, it shall not attract the excise duty and VAT which was otherwise paid by the manufacturer and is also evident on record. It was incumbent upon the revenue to challenge the same while deducing that the transactions were solely that of the service.
4.4 Furthermore, it appears from the findings and contentions in the order as well as the show cause notice that the sole reason for considering the transaction as 'service' is because the HCL was being lifted by the appellant. Since the manufacturers were required to clear the HCL due to its hazardous nature, the act of lifting the same is treated as service according to the revenue. This implies that the revenue had based its case on the intention of the manufacturer in the clearance of HCL. In fiscal law, the intention for entering into a commercial transaction is not determinative 14 | P a g e ST/10076/2023 -DB of the nature of the transaction when the nature of the transaction is clearly discernible from the facts. If the intention is taken into consideration, all transactions such as the sale of scrap, sale of obsolete and used fixed assets, annual or festival clearance sale, etc., would become service since in all such cases the seller's intention is merely to clear or dispose of them off. Similarly, the intent as to why the manufacturers wished to clear the HCL shall not be allowed to determine the nature of the transaction. The nature of the transaction in the present case is clearly discernible from the facts and evidence and that is of the sale of the goods.
Therefore, we do not find any factual merit in the contention of revenue to treat the transaction as a service.
4.5 Furthermore, as a matter of fact, it is seen that the HCL is a liquid commodity which was being purchased and then taken into a tanker, i.e., a transport vehicle belonging to the appellant, and then transported to the location of the purchaser. It is also found from the statements furnished by the appellant in compilation and which fact is undisputed by the revenue that the appellant takes delivery of HCL in its tanker at the premises of manufacturers and then immediately transports it to the location of the purchaser without storing it at any place of the appellant. HCL being a liquid commodity does not require specific activity of lifting per se on the part of the appellant but can be poured by the manufacturer into the tanker pertaining to the appellant. In such circumstances, the amount of discount which is involved cannot be attributed to any act of lifting activity on the part of the appellant. It is also found from the invoices that the ownership (property) of HCL is transferred in favor of the appellant immediately upon delivery in the tanker at the premises of the manufacturers. Thus, anything carried out by the appellant after it became its property shall be tantamount to self-service if regarded as services. The definition of 'service' as given in clause (44) necessitates activity carried out by one person for another in order to bring it within the scope of the definition. If the activity is carried out by the appellant for itself, it cannot be regarded as 'service' as per the definition, and thus the question of taxation does not arise.
4.6 We may further advance the discussion in the interest of justice to explore if there is any remotest possibility of taxation, and with that, we may determine the nature of 'service,' assuming that the discount 15 | P a g e ST/10076/2023 -DB constituted consideration towards an activity carried out by the appellant for the manufacturers. It is essential that the nature of such activity be determined, and to which the appellant has alternatively argued that the same is covered by clause (p) of section 66D of the Act. Provisions of clause (p) of section 66D are as under :
"(p) services by way of transportation of goods--
(i) by road except the services of--
(A) a goods transportation agency; or
(B) a courier agency;
(ii) by an aircraft or a vessel from a place outside India up to
the customs station of clearance in India; or
(iii) by inland waterways;"
4.7 From the facts and records, we find that the activity, if any, carried
out by the appellant to which the amount of discount is to be attributed, is towards the transportation of HCL from the location of the manufacturers to the location of the buyers. It is evident that the HCL was transported from the premises of the manufacturers directly to the premises of the buyer without storing or warehousing them. This suggests that the nature of the activity should be classified as transportation services. All services by way of transportation of goods by road, except when they are provided by a GTA or courier, shall be treated as negative list services as per clause (p) of section 66D of the Act. It is apparently clear that the HCL is transported in a tanker by way of road, and thus it primarily falls within the scope of clause (p). It is also clear that the appellant is not a courier agency. Regarding whether the appellant is a GTA, a reference is to be made to the definition of GTA according to which it is an agency that issues a consignment note by whatever name called. Although the 'consignment note' is nowhere defined, according to general law, the consignment note is an instrument issued to the owner of the goods by the transporter in lieu of taking custody of the goods. Since the appellant became the owner of the goods immediately upon taking delivery thereof at the premises of the manufacturers and thereafter transportation was occasioned by the appellant, it is impermissible to issue a consignment note by the appellant to the manufacturer. Accordingly, the appellant cannot be regarded as a 16 | P a g e ST/10076/2023 -DB GTA. Thus, the activities should be classified as negative list services as per clause (p) of Section 66D of the Act.
4.8 We also find that in case it is presumed, without prejudice, that the appellant was a GTA and thus the clause (p) was not applicable, the tax was required to be paid by the manufacturer in terms of rule 2(1)(d) read with Notification No. 30/2012-ST, and thus the tax demanded from the appellant is unsustainable.
4.9 As per our above discussions and findings, it is beyond doubt that the amount of discount received by the appellant does not fall within the ambit of service tax.
5. Accordingly, the impugned order is set aside, appeal is allowed with consequential relief.
(Pronounced in the open court on 23.04.2024) (RAMESH NAIR) MEMBER ( JUDICIAL ) (C. L. MAHAR) MEMBER ( TECHNICAL ) AD