2014 (5) TMI 424 - AT - Service Tax

Supply of Tangible Goods Service - operational control - cleaning service - Held that - it is seen that the invoices have been raised for hiring of equipment. The learned counsel has clarified that in the case of hiring of equipment, it is MUSCO who had the control over the equipment and the appellant has merely hired the equipment to MUSCO. They did not provide any operators for operating the equipment nor did they undertake any activity using the equipment. If these facts are correct, then the activity of hiring of the equipment would not come under the category of supply of tangible goods for use. The said service envisages operation and control of the equipment or capital goods with the service provider. In the absence of operational control in the hands of the service provider, the service cannot be classified under supply of tangible goods for use . Similarly, with regard to the other activities undertaken by the appellant such as cleaning service, from the nature of the activity undertaken, it appears that the same involved excavation work also. If that be so, the activity would not be classifiable as a cleaning service. Since the factual position is not clear, we are of the considered view that the matter has to go back to the original adjudicating authority for fresh consideration for ascertaining the facts and thereafter decide the classification of service - matter remanded back - Decided in favour of assessee.

Summary

Issues:
1. Service Tax liability on services provided by M/s. Praveen Engineering Works to M/s. Mahindra Ugine Steel Co. Ltd.
2. Classification of services as 'Supply of Tangible Goods Service' and liability determination.
3. Appeal against Order-in-Appeal No. US/567/RGD/2012 passed by the Commissioner of Central Excise (Appeals), Mumbai Zone-II.

Analysis:
1. The appellant, M/s. Praveen Engineering Works, provided various services to M/s. Mahindra Ugine Steel Co. Ltd. without discharging Service Tax liability, leading to a demand of &8377; 23,93,668/- along with interest and penalty. The appellant contended that most of their activity involved hiring out JCB equipment, which should not be classified as cleaning service. They argued that excluding hiring activity would bring their turnover below the exemption limit for small service providers, making them not liable for Service Tax.

2. The Revenue relied on the proprietor's admission of providing labor, cleaning services, and tangible goods like JCB, dumpers, etc. to M/s. Mahindra Ugine Steel Co. Ltd. The Revenue argued that since the appellant admitted to these services, the demand was legally sustainable. However, the Tribunal found discrepancies and lack of clarity in the nature of services provided, necessitating a fresh consideration by the adjudicating authority.

3. Upon careful consideration, the Tribunal decided to waive the pre-deposit requirement and took up the appeal for direct consideration due to the need for fresh assessment. The Tribunal observed that many invoices were for equipment hiring, where the appellant did not have operational control over the equipment, indicating it may not qualify as 'supply of tangible goods for use service.' Similarly, the nature of the cleaning service involving excavation work raised doubts about its classification. The matter was remanded for detailed examination, including obtaining information from M/s. Mahindra Ugine Steel Co. Ltd. and thorough scrutiny of bills and documents.

4. The Tribunal allowed the appeal for remand, emphasizing the appellant's right to a fair hearing and cooperation with the department for document submission. The decision highlighted the importance of ascertaining facts for correct service classification before passing the final order, ensuring due process and thorough examination of the issue.

Conclusion:
The judgment remands the case for a fresh assessment to determine the correct classification of services provided by M/s. Praveen Engineering Works, emphasizing the need for clarity and detailed examination of facts before making a final determination on Service Tax liability.