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2024 (4) TMI 229 - AT - Service TaxClassification of services - supply of tangible goods service or not - supply of tangible goods without transferring the right of effective control - providing a taxable service to their clients i.e., prior to 01.07.2012 - HELD THAT - An identical issue has already been examined in the case of the Haryana unit of the appellant by the Tribunal in M/S LINDSTROM SERVICE INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX 2019 (8) TMI 427 - CESTAT CHANDIGARH it was observed in the instant case, in terms of agreement work-wear rented out always remains within the exclusive possession of their clients and nobody else can use the those work-wear at the same time and hence effective control to lie with the user/ clients. The appellant, therefore, does not have control over the use of the work-wear. Thus the activity is not in the nature of service under the Finance Act in both during the period prior to negative list regime and thereafter as held in the impugned order. As the issue has been settled in favour of the appellant, therefore, the appellant is not liable to pay Service Tax - the impugned order is set aside - appeal allowed.
Issues Involved:
1. Classification of service provided by the appellant. 2. Demand of Service Tax for the period from 01.08.2014 to 31.03.2017. 3. Applicability of previous Tribunal decisions to the current case. 4. Determination of effective control and possession in the context of service tax liability. Summary: Issue 1: Classification of Service Provided by the Appellant The appellant, M/s. Lindstrom Services India Private Limited, is engaged in leasing workwear to clients. The Revenue concluded that the service provided falls under "supply of tangible goods service" as per Section 65(105)(zzzzj) of the Finance Act, 1994 before 01.07.2012, and under Section 65B(44) read with Section 69(f) of the Act post 01.07.2012. It was alleged that the appellant supplied tangible goods without transferring the right of effective control, thereby providing a taxable service. Issue 2: Demand of Service Tax for the Period from 01.08.2014 to 31.03.2017 A Show Cause Notice was issued to the appellant demanding Service Tax for the specified period, which was confirmed by the impugned order. The appellant contested this order. Issue 3: Applicability of Previous Tribunal Decisions to the Current Case The appellant's counsel argued that an identical issue had been decided in favor of the appellant's Haryana unit by the Tribunal in Final Order No. 60716 of 2019 dated 02.08.2019. The Tribunal had observed that the appellant's agreements with clients involved transfer of effective control, and thus, the service did not qualify as "supply of tangible goods service." Issue 4: Determination of Effective Control and Possession in the Context of Service Tax Liability The Tribunal examined the agreements and found that the appellant retained ownership and exclusive rights to wash and service the workwear. However, effective control was transferred to the clients, as they had the exclusive right to use the workwear during the lease period. The Tribunal referenced the Supreme Court's decision in Bharat Sanchar Nigam vs. Union of India, which outlined the attributes necessary for a transaction to constitute a transfer of the right to use goods. The Tribunal concluded that the appellant's activities did not retain effective control over the workwear, aligning with the criteria set by the Supreme Court and other relevant judgments. Conclusion: The Tribunal held that the appellant is not liable to pay Service Tax as the issue had been settled in favor of the appellant in previous cases. The impugned order was set aside, and the appeal was allowed with consequential relief. Operative Part: The operative part of the order was pronounced in open court.
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