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TMI Blog2025 (3) TMI 1061X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the conclusion as regards transfer of effective control and possession. While the department has highlighted some provisions to say that effective control rests with the respondents, the respondents have tried to justify the factual position as apparent from the terms and conditions to support their submission that the control and possession is with the customers. The Chennai Bench in the respondent's own case, [2020 (11) TMI 14 - CESTAT CHENNAI], keeping in view the judgment of Hon'ble Supreme Court in the case of BSNL and the terms and conditions of the agreement, as also the decision by the Chandigarh Bench in the respondent's own case, as also the Order-in-Appeal dt.26.12.2017 of the Commissionerate of Hyderabad, which had set aside the demand observing that appellant has actually transferred the possession, right to use and effective control of the workwear and therefore, the activity was not taxable under the category of SOTG service, came to the conclusion that the transaction is not in the nature of service. There is no dispute that the terms and conditions of the agreement discussed by the Chandigarh Bench as well as Chennai Bench are different than the terms and co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant and therefore, this activity would be covered within the purview of SOTG service under section 65(105)(zzzzj) of the Finance Act, 1994 for the period up to 30.06.2012 and thereafter, under section 65B(44) read with provisions of section 66E(f) of Chapter V of the Finance Act, 1994 under the category of 'declared service'. Essentially, the department felt that in terms of different terms and conditions of the agreement between the respondent and its customers, the transfer of goods by way of hiring, leasing, etc., is without transfer of right to use such goods and control by customers. 3. The Commissioner (Appeals) has taken into account various facts including the classification of transaction between the respondent and its customers, which the department considered as being covered under SOTG service and also examined the contracts. He has noticed that the lower authority held that under the agreement, there was no transfer of right to use and the effective control was not with the client, whereas the respondent has argued that transfer of possession was operative and that the exclusivity clause for maintenance and washing of workwear is to enhance durability as they under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transaction and in respect of terms and conditions of the agreement, there is clearly no transfer of effective control and possession to the customers and therefore, the transaction would clearly fall within the purview of service under the category of SOTG service for the period prior to 30.06.2012 and thereafter as 'declared service' and is not a case of deemed sale. 5. On the other hand, learned Advocate for the respondent, apart from reiterating their grounds that there has been an effective transfer of control and possession to their customer and therefore, the transaction would fall within the category of 'deemed sale' and therefore, no liable to service tax for the period prior to 30.06.2012 and also thereafter. He highlights that any activity which involves transfer, delivery or supply of any goods, which is deemed to be a sale within the meaning of clause (29A) of article 366 of the Constitution would not be covered within the category of service itself. He further submits that from the terms and conditions, it is obvious that the transaction is that of deemed sale and not service. He has categorically submitted that the respondent has fulfilled all the conditions enu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r will be provided with the workwear of his size which will be measured by the appellant. (ii) The appellant would own the work-wear and will have exclusive right to wash and service the same. (iii) If the delivery is delayed or defective, the same shall be compensated by Lindstrom. (iv) The work-wear shall be collected by the customer once a week for being sent to Lindstrom for servicing. (v) If the work-wear cannot be leased because of wear and tear, it will be returned to Lindstrom but the customer shall pay the price as per the price list (depreciated price). If the work-wear is to be replaced by the customer, the same is to be redeemed at agreed upon price. (vi) The leasing fee and other charges are based on the current price of the work-wear. (vii) If the Customer withdraws from the contract at any time, he shall pay to Lindstrom the invoicing value of the termination period. (viii) Retail Price will increase every year by 10%. (ix) Service Fee of the Garment included in the price. (x) VAT is being charged on the rental charges. (see invoice) There are separate provisions for pricing of replacement and valuation of redemption price. These conditi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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