2024 (4) TMI 111 - AT - Service Tax

Nature of transaction - deemed sale or service - appellant is a subsidiary of Lindstrom OY Finland and is engaged in leasing work-wear to their clients on the conditions mentioned in the agreements with their clients - possession and effective controls remained with the customers - HELD THAT - The issue involved in the present case has earlier been considered in the appellant‟s own case for the earlier period by various Benches of the Tribunal and has held in favour of the appellant/ assessee. Reliance can be placed in M/S. LINDSTROM SERVICES INDIA PVT. LTD. VERSUS PRINCIPAL COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI 2021 (9) TMI 71 - CESTAT CHENNAI where it was held that The issue as to whether the activity of renting of workwear is a service or deemed sale has been analyzed by this Tribunal in the appellant s own case 2020 (11) TMI 14 - CESTAT CHENNAI for a different period, where it was held that work wear does not amount to supply of tangible goods so as to attract service tax. The final order of Chennai Bench of CESTAT were appealed by the Revenue before the Hon ble Supreme Court - the Hon ble Supreme Court in PRINCIPAL COMMISSIONER OF GST AND CENTRAL EXCISE VERSUS M/S LINDSTROM SERVICES INDIA P. LTD. 2023 (10) TMI 601 - SC ORDER has dismissed the appeals of the Revenue as being without merit and the copy of the order is also placed on record. The issue has finally been settled by the Hon ble Supreme Court in favour of the appellant and therefore, by following the ratio of the above said decision, the impugned orders are not sustainable in law - Appeal allowed.

Summary

Issues involved:
The judgment involves the confirmation of demands by the Commissioner for specific periods, the issue of whether the transaction between the appellant and customers is a deemed sale liable to VAT or service tax, and the sustainability of the impugned order.

Confirmation of Demands:
The appeals were directed against the common impugned order confirming demands of Rs.1,41,95,265/- for one period and Rs.2,35,06,488/- for another period. The issue in both appeals is identical, and thus, both were taken up together for discussion and disposal.

Nature of Transaction:
The appellant, registered under Service Tax u/s 69 of the Finance Act, 1994, provides/receives various services. The appellant, a subsidiary of Lindstrom OY Finland, leases work-wear to clients based on agreements. The issue arose when a Show-Cause Notice was issued for a specific period, alleging service tax liability. The appellant contended that the transaction was a deemed sale subject to VAT, not service tax. The Tribunal had previously allowed the appeal for an earlier period, setting aside the Order-in-Original. Subsequent Show-Cause Notices were issued and adjudicated against the appellant.

Sustainability of Impugned Order:
The appellant argued that the impugned order was unsustainable as it did not properly appreciate facts and law. Referring to previous Tribunal decisions in the appellant's favor, the appellant contended that the issue had been settled in their favor. The Authorized Representative for the Department reiterated the findings of the impugned order. The Tribunal considered previous decisions in the appellant's favor and held that the impugned orders were not sustainable in law. The Tribunal set aside the orders, allowing the appeals with consequential relief, if any.

Final Settlement by Supreme Court:
The Tribunal noted that various Benches had ruled in favor of the appellant in similar cases. The issue was also considered by the Chennai Bench, which held in favor of the appellant. The Hon'ble Supreme Court dismissed appeals by the Revenue, confirming the settlement of the issue in favor of the appellant. Consequently, the Tribunal set aside the impugned orders, following the Supreme Court's decisions.