2018 (4) TMI 773 - AT - Service Tax

Supply of Tangible Goods Service - the respondent stated that they hire furniture on rent to visitors in business exhibitions as per the requirement of the organizers and exhibitors and they are treating the same as deemed sale and paying VAT on the same - Held that - it is an admitted fact in the SCN that the respondent-assessee has paid VAT on the disputed transaction - the SCN is presumptive in nature as there is no finding and/or allegation that effective control of the goods/ furniture was not given by the respondent to its customers. There is no allegation nor any finding by the courts below that the right of Possession and/or effective control of the furniture/ equipment was not given by the respondent to its customers. Thus the essential facts for levy of Service Tax under the category of Supply of Tangible Goods are wanting. Appeal dismissed - decided against Revenue.

Summary

Issues:
- Whether the appellant provided service under the category of "Supply of Tangible Goods."

Analysis:
The appeal involved the question of whether the appellant provided services under the category of "Supply of Tangible Goods." The respondent-assessee was registered with the Service Tax Department and was providing various services, including Erection, Commissioning & Installation, Business & Exhibition Service, GTA & Works Contract. During an audit, it was observed that the respondent had booked income under "Hiring of Office Furniture," which raised concerns about potential Service Tax liability. The Revenue alleged that the transaction fell under the category of "Supply of Tangible Goods" and issued a Show Cause Notice proposing a demand for Service Tax. The respondent claimed they treated the transactions as deemed sales and paid VAT. The Revenue contended that the right to use the furniture was transferred to customers, triggering Service Tax liability. The Additional Commissioner upheld the demand, imposing penalties. However, the Commissioner (Appeals) allowed the appeal, setting aside the Order-in-Original.

Upon hearing both parties, the Tribunal noted that the Show Cause Notice was presumptive, lacking findings on the transfer of effective control of goods. The definition of "Supply of Tangible Goods" under the Finance Act required services for use without transferring right of possession and effective control. The Tribunal found no evidence that the respondent did not transfer possession or effective control to customers. As a result, the Tribunal deemed the Show Cause Notice vague and not maintainable. The Tribunal upheld the Commissioner (Appeals) decision, dismissing the Revenue's appeal. The respondent-assessee was entitled to consequential benefits as per the law.