2018 (12) TMI 785 - AT - Service Tax

Support Services of Business or Commerce - Non-payment of service tax - supply of crane material handling equipment - Held that - Supply of tangible goods as a service has been included in the taxable category with effect from 16.5.2008 by introducing necessary amendment to the Finance Act 1994. This proves that this service was not within its ambit prior to its introduction the supply of crane and other material equipment handling equipment etc. on hire were not covered by any existing entry in the Finance act prior to 16.5.2008 which necessitated the creation of new entry for such type of services rendered by the service provider. It was the background against which the legislature created a new category of services in the name of supply of tangible goods . The introduction of new category of service itself proves that such activity was not under service tax net before 16.5.2005 - supply of tangible goods cannot be considered as support service of business or commerce. Infrastructural Support Services primarily relates to the logistic support system such as the office premises and other office utilities pertaining to the smooth functioning of office and hence supply of cranes and material handling equipment can by no stretch of imagination can be brought within the scope of Support of Service of Business or Commerce . The services provided by the appellant is not covered under the support service of business or commerce - The service provided by the appellant will fall under the category of support of tangible goods with effect from 16.5.2008. In the case demand pertains to the period from 1.4.2006 to 10.3.2008 and hence non-taxable under the Finance Act. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Non-payment of service tax on services rendered by the appellant.

Analysis:
1. The issue involved in this case pertains to the non-payment of service tax on services provided by the appellant, specifically related to the supply of hydra cranes and material handling equipment on a hire basis. The Revenue attempted to levy service tax under the category of "Support Services of Business or Commerce" on the pretext that the services rendered by the appellant fell under the scope of 'logistic service infrastructure support' service.

2. The appellant contended that they were not providing 'business support service' but were engaged in the supply of tangible goods, which became taxable from 16.5.2008 onwards. The appellant argued that prior to this date, there was no service tax leviable on the supply of tangible goods without transferring the right or possession thereof. The appellant relied on the judgment of the Hon'ble Bombay High Court to support their argument that the introduction of a new entry under the Finance Act indicated that such services were not previously within the purview of service tax liability.

3. The Tribunal examined the definition of 'Support Service of Business or Commerce' under Section 65(104c) of the Finance Act, 1994, which primarily includes services related to business operations and logistics support. The Tribunal found that the supply of cranes and material handling equipment did not fall within the ambit of 'Support Service of Business or Commerce' as defined. The Tribunal also referenced a previous decision where it was established that providing equipment on rent did not align with infrastructural support services.

4. The Tribunal further supported its decision by citing the judgment of the Hon'ble Bombay High Court, which emphasized that the introduction of a new entry in the tax law implied that services previously not covered under any entry were not taxable. Therefore, the Tribunal concluded that the services provided by the appellant did not fall under the category of 'Support Service of Business or Commerce' but rather under 'support of tangible goods' with effect from 16.5.2008. Consequently, the demand for service tax for the period before 16.5.2008 was deemed non-taxable under the Finance Act, leading to the setting aside of the impugned order in favor of the appellant.