2025 (3) TMI 1187 - AT - Service Tax

Classification of services - supply of tangible goods service - services of providing material handling equipment to various clients - demand prior to period 16.05.2008 - HELD THAT - A similar issue has been dealt with by this Tribunal in the appellant s own case 2018 (12) TMI 785 - CESTAT KOLKATA wherein this Tribunal has already held that the service rendered by the appellant is not liable to be taxed under the category of business support services for the period under dispute. Conclusion - The service rendered by the appellant is not liable to be taxed under the category of business support services . The demand set aside - appeal allowed.

ISSUES PRESENTED and CONSIDERED

The core legal issue in this case was whether the service of hiring cranes provided by the appellant should be classified and taxed as "business support services" under Section 65(104c) of the Finance Act, 1994, or as "supply of tangible goods" under Section 65(105)(zzzzj) of the Finance Act, 1994. The classification was crucial because the latter category was only introduced into the service tax net from 16.05.2008, and the demands in question pertained to periods before this date.

ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents

The legal framework involved the interpretation of Section 65(104c) and Section 65(105)(zzzzj) of the Finance Act, 1994. The former pertains to "business support services," while the latter, introduced on 16.05.2008, pertains to "supply of tangible goods." The appellant argued that their services fell under the latter category, which was not taxable before its introduction. A precedent from the appellant's own case (Final Order No. 76552 of 2018) and the decision of the Bombay High Court in the case of Indian National Shipowners' Association were also considered.

Court's Interpretation and Reasoning

The Tribunal analyzed the classification of the services provided by the appellant. It concluded that the services should be classified under "supply of tangible goods" as per Section 65(105)(zzzzj) of the Finance Act, 1994. The Tribunal reasoned that since this category was introduced only from 16.05.2008, services rendered before this date could not be taxed under this category. The Tribunal also noted that the creation of a new entry for "supply of tangible goods" implied that such services were not previously covered under any existing entry, including "business support services."

Key Evidence and Findings

The Tribunal found that the appellant had been providing material handling equipment without transferring the right of possession and effective control, aligning with the definition of "supply of tangible goods." The Tribunal also relied on the appellant's previous case, where it was held that the services were not taxable under "business support services" for the period under dispute.

Application of Law to Facts

The Tribunal applied the legal framework to the facts by determining that the appellant's services were not covered under "business support services" for the periods in question. The Tribunal emphasized that the introduction of the "supply of tangible goods" category in 2008 indicated that such services were not previously taxable under any other category.

Treatment of Competing Arguments

The Revenue contended that the services should be taxed as "business support services." However, the Tribunal rejected this argument, citing the introduction of a specific category for "supply of tangible goods" and the precedent set in the appellant's previous case. The Tribunal found the appellant's argument more persuasive, supported by legal precedents and the timing of the introduction of the "supply of tangible goods" category.

Conclusions

The Tribunal concluded that the services provided by the appellant were not liable to be taxed under "business support services" for the periods before 16.05.2008. The demands raised in the impugned order were set aside, and the appeal was allowed with consequential relief as per law.

SIGNIFICANT HOLDINGS

The Tribunal held that the services provided by the appellant were not taxable under "business support services" for the periods prior to the introduction of the "supply of tangible goods" category. The Tribunal quoted the Bombay High Court's reasoning that the introduction of a new entry for "supply of tangible goods" indicated that such services were not previously covered by any existing entry. This established a core principle that the creation of a new tax category implies the absence of prior coverage under existing categories.

Final determinations included setting aside the demands confirmed in the impugned order and allowing the appeal with consequential relief. The Tribunal's decision was dictated and pronounced in open court.

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