2013 (12) TMI 969 - AT - Service Tax

Demand of service tax - Supply of gas in reusable and returnable containers - Held that - The transaction does not involve in supply of tangible goods for use at all. The appellant imported helium gas and the helium gas has to be filled in reusable and returnable containers. The supply of cylinders is part of sale of gas and it is not a separate activity in itself and therefore, the rental charges for the cylinders form part of the value of the goods sold. In view of the above, the clarification given by Joint Secretary (TRU) does not apply. Accordingly, we prima facie view that the appellants has made out a strong case in their favour for grant of stay. Accordingly, we grant unconditional waiver from pre-deposit of dues adjudged against the appellant and recovery thereof is stayed during the pendency of the appeal - Decided in favour of assessee.

Summary

Issues:
1. Taxability of rental charges for reusable and returnable containers imported along with helium gas.
2. Interpretation of service tax liability on rental charges for containers in possession of the importer.
3. Comparison of excise duty on rental charges for domestic supply with service tax on rental charges for imported goods.

Analysis:
1. The appeal concerned the taxability of rental charges for reusable and returnable containers imported along with helium gas by the appellant. The department contended that renting of containers falls under the taxable service category of supply of goods for tangible use, necessitating the discharge of service tax liability by the recipient in India.

2. The appellant argued that the possession and control of the containers remained with them during usage, and hence, the supply of cylinders did not constitute supply of tangible goods, making it non-taxable. They further highlighted that excise duty on rental charges for domestic supply is charged on the value of goods sold, indicating that duty and service tax should not be separately imposed on the same activity.

3. The Additional Commissioner for the Revenue referred to a clarification stating that allowing another person to use goods, without legal right of possession and effective control, is treated as a service. However, the Tribunal observed that in the case at hand, the transaction did not involve the supply of tangible goods for use, as the cylinders were part of the sale of gas and not a separate activity. Therefore, the rental charges for the cylinders were considered part of the value of the goods sold.

4. Consequently, the Tribunal granted an unconditional waiver from pre-deposit of dues adjudged against the appellant and stayed the recovery thereof during the appeal's pendency. This decision was based on the view that the appellant had presented a strong case in their favor, highlighting that the rental charges for the cylinders were integral to the value of the goods sold, thus not warranting separate service tax liability.