2013 (7) TMI 98 - AT - Service Tax

Supply of Tangible Goods for use - service - Section 65(105)(zzzzj) the appellant rented out bullock carts to the farmers for transportation of the sugar cane to the factories - Held that - The bullock carts are supplied without the bullocks - the possession and control over the cart does not lie with the service provider - mere activity of renting of bullock cart does not come within the purview of Supply of Tangible Goods for use Service . - Decided in favor of assessee.

Summary

Issues:
1. Whether renting out bullock carts for transporting sugar cane constitutes a taxable service under the category of 'Supply of Tangible Goods for Use' for Service Tax purposes.

Analysis:
The appeal and Stay application were directed against an Order-in-Appeal passed by the Commissioner of Central Excise (Appeals), Pune-III. The appellant, M/s Bhima SSK Ltd., rented out bullock carts to farmers for transporting sugar cane to the factory. The department contended that this activity is subject to Service Tax under 'Supply of Tangible Goods for Use' and imposed a demand along with penalties. The appellant's appeal was dismissed by the lower appellate authority, leading to the appeal before the Appellate Tribunal CESTAT Mumbai.

The appellant argued that they only supplied bullock carts, not bullocks or personnel to ride the carts, thus not retaining effective control and possession. Citing a previous Tribunal decision, the appellant claimed that bullock carts cannot be categorized as machinery, equipment, or appliances under 'Supply of Tangible Goods for Use.' The Revenue, represented by the Superintendent (AR), supported the lower authorities' findings.

The Tribunal considered both sides' submissions and noted that the issue was narrow. Referring to Section 65(105)(zzzzj) of the Finance Act, 1994, which defines 'Taxable Services,' the Tribunal clarified that for an activity to fall under 'Supply of Tangible Goods for Use Service,' the service provider must retain possession and effective control over the goods supplied. In this case, as the bullock carts were provided without bullocks, the possession and control did not lie with the service provider. Consequently, the mere renting of bullock carts did not qualify as 'Supply of Tangible Goods for Use Service.'

In conclusion, the Tribunal allowed the appeals and disposed of the stay applications, ruling in favor of the appellant, M/s Bhima SSK Ltd.