2018 (6) TMI 1431 - AT - Service Tax

Evasion of Service Tax - Support Services of Business or Commerce - The Department was of the view that the appellants had evaded payment of service tax by not getting themselves registered under the service tax category of Support Services of Business or Commerce - Held that - The supply of tangible goods as a service has been included in the taxable category of services w.e.f. 16.05.2008 by introducing necessary amendment to the Finance Act, 1994. This very fact proves that the activity, such as supply of cranes and other material handling equipments etc., were not covered in any of the taxable services previous to 16.05.2008 which were leviable to service tax and therefore, the legislature in their prudence had brought in a new category of service under the name of supply of tangible goods service for leviability of service tax under the Finance Act, 1994. The activity of supply of material handling equipment, such as, cranes etc., is not leviable under the category of Support Service of Business or Commerce and this activity has come under the scope of service tax under a category of supply of tangible goods w.e.f.16.05.2008 - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
- Service tax liability on supply of tangible goods before and after 16.05.2008
- Classification of activity under "Support Service of Business or Commerce"

Analysis:

Issue 1: Service tax liability on supply of tangible goods before and after 16.05.2008
The appeal was filed against an Order-in-Original demanding service tax for the period between 1st May, 2006 to 10th March, 2008. The Department argued that the appellant evaded payment of service tax by not registering under the service tax category of "Support Services of Business or Commerce" for providing material handling services. The appellant contended that service tax on "supply of tangible goods" came into effect from 16.05.2008, and prior to that, such services were not taxable. The Tribunal agreed with the appellant, stating that the introduction of a new category of service for "supply of tangible goods" from 16.05.2008 indicated that such activities were not previously covered under service tax. The Tribunal held that the supply of tangible goods cannot be considered as "Support Service of Business or Commerce."

Issue 2: Classification of activity under "Support Service of Business or Commerce"
The Department tried to classify the appellant's activity under "Support Service of Business or Commerce" as logistic support to various business establishments. However, the Tribunal, after analyzing the definition of "Support Service of Business or Commerce" under Section 65(104c) of the Finance Act, 1994, concluded that the supply of material handling equipment like cranes does not fall under this category. The Tribunal referred to previous judgments and held that providing equipment on rent cannot be considered as infrastructural support service. The Tribunal also cited the Bombay High Court judgment, emphasizing that the introduction of a new entry for services implies that those services were not previously taxable. Consequently, the Tribunal set aside the Order-in-Original dated 23.03.2009, ruling in favor of the appellant.

In conclusion, the Tribunal allowed the appeal, stating that the activity of supplying material handling equipment was not taxable under "Support Service of Business or Commerce" but fell under the category of "supply of tangible goods" introduced from 16.05.2008. The decision provided consequential benefits to the appellant in accordance with the law.