9911796707
TMI Blog2019 (8) TMI 427X X X X Extracts X X X X X X X X Extracts X X X X ..... e required for disposal of the appeal, are that the appellants are holding service registration under the Act, for providing/ receiving various services under the provisions of the Act. Acting on the intelligence that the appellant was not paying the applicable service tax in terms of the Act for providing of work-wear to their clients on rental basis in terms of agreements, a visit of the departmental officer was made on 03/11/2014. During the visit statement of Shri Syed Asif, Raja the accountant of the appellant was recorded and also various documents, including agreements for providing work-wear to the clients on the rental basis were resumed. The two such agreements, namely, with M/s Mother Diary Fruits and Vegetables Private Limited and M/s Ecocat (India) Private Limited were also provided by the appellant. Further a statement of Shri Manas Kumar, Business Unit Manager of the appellant was also recorded under Section 14 of the Central Excise Act as made applicable to the service tax matter vide Section 83 of the Finance Act. On scrutiny of document submitted by the appellant and submissions made and deposition made by Shri Syed Ali Raja and Shri Manas Kumar, Department conclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cement and valuation of redemption price. These conditions have been briefly noted at internal page 2 of the impugned SCN. 3.3 Similar Provisions are for in the agreement with M/S ECOCAT INDIA. 3.4 In paragraph 4 of the SCN issued to M/S Lindstrom, it has been inferred that M/S Lindstrom is providing various services including exclusive right for washing and service the work-wear. In Para 5 of the SCN, after discussing the definition of Supply of Tangible Goods Service as incorporated in Section 65(105)(zzzzj) before the introduction of Negative List, it was alleged that the services provided by the appellant was taxable under the aforementioned provision of the Finance Act, 1994. In the SCN, the essential features of the decision of the apex court in the case of Bharat Sanchar Nigam Vs UOI reported in 2006 (2) STR 161 (SC) was also discussed to allege that the transaction was not covered under supply of tangible Goods. 3.5 For the period after 01/07/2012 that is after the introduction of Negative List of Services, it was alleged that the identified service was neither covered by the Negative List nor by the Mega exemption notification. It was further alleged that Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting of work-wear by way of transferring right to use but a complete wear solution that includes designing the work wear, washing and maintaining it, repairing it when necessary, storing providing locker service, delivering clean and maintained clothing on weekly basis. The appellant provides a bundle of services and right of effective control remains with the appellant. (iii) He, therefore concluded that it is not an activity of transfer of right to use the goods, particularly as there was no transfer of effective control. (iv) In Para 8.6 of the Order, he observes that the transaction between the appellant and customer does not fulfil the ingredients enumerated in BSNL and Rashtriya Ispat Nigam case. (v) He, therefore, held that the activity undertaken by the appellant was taxable service for both the periods i.e. prior to 1/07/2012 as activity of supplying Tangible Goods as defined under Section 65(105)(zzzzj) of the Act and after 01/07/2012, under the definition of service defined under Section 65B(44) read with section 66E(f) of the Act. (Para 9 of the OIO at internal page 22) He allowed the CENVAT Credit on the input/input service. He also allowed benefit of Notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht to use the goods-consequently all legal consequences of such use including any permissions or licenses required therefore should be available to the transferee; it was submitted that the work-wear is specifically prepared for the employees of a particular establishment. The appellant is required to give delivery as per specification provided by the clients customer. Once the garments are delivered, it is for the customer to satisfy any legal requirements which may be demanded by any authority. The appellant has no obligation to fulfil any compliance except the size of the garment. Any other compliance has to be undertaken by the customer without any interference by the appellant. For example, if the user is a hospital and they, by law, require to use only white dress, it is for the customer to ensure that. The appellant is neither responsible nor required to fulfil the said condition. It is entirely for the customer to ensure that. There is no covenant in the agreement which binds the appellant to ensure compliance of any requirement of law other than what is mentioned in the Agreement. Thus, this condition is also fulfilled. * The fourth condition is that for the period duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing into the transaction has paid VAT on the transaction. It is submitted that the appellant has paid VAT on all transaction with their customers as is evident from the invoices issued to them. Representative invoices are submitted in Paper Book. 8. It is submitted that once it is decided that the transaction is a transaction of sale, then no other argument is required for claiming that the transaction is not a transaction of Supply of Tangible Goods under section 65(105)(zzzzj) of the Finance Act, 1994. The said section is worded as below: Taxable Service means any service provided or to be provided to any person, by any other person in relation to supply of tangible goods including machinery, equipment, and appliances for use, without transferring the right of possession and effective control of such machinery, equipment or appliances. 9. It is submitted that the appellant has made it very clear that this case not only the right of possession of garment was transferred but also it was under the effective control of the Customer/clients. They could use the garment as per their own free will. The supplier had not imposed any restriction on use of the garment. As the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. It is further submitted that the Hon'ble Tribunal in the case of GIMMCO LTD. Versus COMMISSIONER OF C. EX. & S.T., NAGPUR reported in 2017 (48) STR 476 (Tr.-Mum) has quoted with approval the gist of decision of the Hon'ble High Court of Andhra Pradesh in the case of G.S. Lamba (The original Order of GS LAMBA has been submitted at the time of hearing) in Para 5.4 as below: 5.4 The Hon'ble High Court observed that the essential requirement of a transaction for transfer of the right to use goods are : (1) it is not the transfer of the property in goods, but it is right to use property in goods; (2) Article 366(29A)(d) read with the latter part of the Clause (29A) which uses the words, "and such transfer, delivery or supply" would show that the tax is not on the delivery of the goods used, but on the transfer of the right to use goods regardless of when or whether the goods are delivered for use subject to the condition that the goods should be in existence for use; (3) in the transaction for the transfer of the right to use goods, delivery of goods is not condition precedent, but the delivery may be one of the elements of the transaction; (4) the effective or genera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other person is allowed to wash the work-wear and maintenance is also mandatorily required to be done by the appellant. The work-wear supplied to their various customers in terms of agreement remains under the effective control of appellant, and therefore, the question of treating the contract as deemed sale, as claimed by the ld. Advocate is not appropriate and correct. He hence prays for upholding the impugned order in appeal. 18. We have heard Ld. Advocate for the appellant and Ld. DR for Revenue and also perused the appeal records. 19. The appellant is engaged in providing work-wear solution to the various industrial customers in terms of various agreements where there is transfer of effective control to the client. For the better appreciation the issue involved, it will be appropriated to extract the relevant provisions of the agreement entered by the appellant with their customers. A perusal of the agreement which has been placed on appeal record between the appellant and Mother Diary Fruits and Vegetables indicates that the agreement is for; * Supply of work-wear on rental basis as per the requirement of customers; * Selection and fitting of individualise work-wear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tution of India. It is necessary to have transfer of right to use involving both transfer of possession and also effective control of the goods by the user of the goods. The transaction for allowing another person to use the goods without giving legal right of possession cannot be treated as deemed sale of the goods, and thus has to be treated as service only. It is also the contention of the Department that after introduction of the negative list based tax regime, the activity of the supply of goods without transfer of right liable to tax by virtue of Section 66E (f) of Finance Act. On the other hand, we find that Ld. Advocate as relied upon the Hon'ble Supreme Court's decision in case of Bharat Sanchar Nigam vs. Union of India, wherein it is held under; 91. To constitute a transaction for the transfer of the right to use the goods the transaction must have the following attributes : a. There must be goods available for delivery; b. There must be a consensus ad idem as to the identity of the goods; c. The transferee should have a legal right to use the goods-consequently all legal consequences of such use including any permissions or licenses required therefor should b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to use the vehicles by Grasim. The clause for providing dedicated fleet of vehicles with Grasim's logo "Birla Concrete" being painted on them is no indication that the intention was to transfer the right to use Transit Mixers. The RMC is a product with short shelf life and its marketability depends on the quality. So as to assure the product quality to end-user, it was agreed to paint the brand name on the vehicles. The same, however, does not lead to an inference that there is consensus ad idem; and that the Petitioners should keep ready the dedicated fleet of eight vehicles to be used by Grasim. In the absence of transfer of possession and effective control, Section 5-E of the Act is inapplicable. Lastly it is urged that the Tribunal was in error in not recording findings on all the issues raised by the Petitioners. The Counsel relied on various precedents to which a reference would be made at the appropriate place." 25. From the perusal of these judgments, it is evidently clear that the some of the activities of regarding the maintenance and washing of work-wear rented to the clients, by the appellants will not mean that effect control as been retained by the appellant. Fu ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
