2019 (4) TMI 814 - AT - Service Tax

Classification of services - supply of tangible goods services or not - whether the fitting and furniture in a residential premises which was leased out for residential purposes will amount to supply of tangible goods? - Held that - While transferring the impugned articles by way of lease the appellant was not retaining the right of possession and effective control of leased articles except for such loss which were beyond the control of lessee - the transferred articles cannot be held to be Supply of Tangible goods - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Dispute regarding the transfer of furniture, electrical appliances, and devices in a leased residential premises.
2. Interpretation of whether the transfer of these articles amounts to the supply of tangible goods.
3. Application of the definition of service for supply of tangible goods under section 65(105)(zzzzj).
4. Examination of the lease agreement and the right of possession and control of the transferred items.
5. Determination of whether the transferred articles qualify as 'Supply of Tangible Goods' service for levying service tax.

Analysis:
The appeal was filed against an Order-in-Appeal where a demand related to renting immovable property was dropped, but a demand concerning the supply of tangible goods was upheld. The dispute revolved around furniture, appliances, and devices in a leased residential premises. The appellant argued that the possession of these articles was transferred to the lessee along with the premises, thus not constituting a supply of tangible goods. The Commissioner (Appeals) held otherwise, considering the articles as tangible goods supplied. The definition of service for supply of tangible goods under section 65(105)(zzzzj) was deemed relevant, emphasizing the need to retain the right of possession and effective control of the goods. The lease agreement terms were scrutinized, revealing that the possession and control of the articles were transferred to the lessee, not merely for use. The Tribunal concluded that the appellant did not retain possession and control of the leased articles, except for circumstances beyond the lessee's control. Therefore, the transferred articles did not qualify as 'Supply of Tangible Goods,' rendering the service tax demand unsustainable. Consequently, the impugned order was set aside, and the appeal was allowed.