9911796707
TMI Blog2020 (11) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest and also for imposing penalty. After due process of law, the original authority as per the impugned order confirmed the tax, interest and imposed penalty. Aggrieved by such order, the appellants are now before the Tribunal. 2. On behalf of the appellant, ld. counsel Shri B.K. Singh appeared and argued the matter. He submitted that the transaction of work wear rental does not fall under the category of supply of tangible goods and that the activity is deemed sale for which the appellant has discharged appropriate VAT. Service Tax and VAT being mutually exclusive and since the activity falls under the category of deemed sale, demand cannot sustain. He adverted to the conditions in the agreement and argued that the test laid down by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand observing that appellant had actually transferred possession, right to use and effective control of the work wear and therefore the activity is not taxable under supply of tangible goods. 4. On behalf of the department, ld. AR Shri L. Nandakumar had filed written synopsis. He argued that from various judicial pronouncements it is clear that the levy of tax on an activity as sales tax / service tax has to be decided on the nature of transaction and the agreement entered between the parties. In the instant case, the appellant has not effected actual sale but has only undertaken the activity of leasing goods and maintenance of such leased goods. Therefore, the transaction involves leasing of work ware and no sale has taken place as arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r remains the property of LSIP." 7. The Chandigarh Bench of the Tribunal had occasion to analyse very same issue and terms and conditions of similar agreement entered into by the appellant with clients. After analysis of the transaction as seen from the agreements, the Tribunal held as under:- "26. Accordingly, we find that in the instant case, in terms of agreement work-wear rented out always remains with the exclusive possession of their clients and nobody else can use those work wear at the same time and hence effective control to lie with the user / clients. The appellant, therefore, does not have control over the use of the work-wear. Thus the activity is not in the nature of 'service' under the Finance Act in both during the period ..... X X X X Extracts X X X X X X X X Extracts X X X X
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