Service Tax – Cestat Ahmedabad: As work-wear was always in the control of appellant and hence there is no transfer of effective control by the appellant hence out of the purview of the deemed sale - 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 – Appeal allowed [Order attached]
M/s LINDSTORM SERVICES INDIA PVT LTD Vs C.C.E. & S.T.-Vadodara-I
Order date – 23 January 2022
- The appellant, M/s Lindstorm Services India Pvt Ltd, is a subsidiary of Lindstrom OY Finland and is engaged in leasing workwear (uniform) to their clients on the conditions mentioned in the agreements with their clients.
- The activity includes renting/ leasing of work-wear, washing, maintenance, repairing, alteration, designing of workwear, providing lockers and transportation of Work-wear.
- Adjudicating authority was of the view that since the effective control of the goods has not been transferred, the activity of leasing of work-wear falls under the category of taxable service i.e. supply of tangible goods service prior to introduction of negative list and declared service post negative list regime, therefore, the demand of service tax was dropped in relation to appeal No. ST/107182021.
- Revenue being aggrieved, filed an appeal wherein the same allowed by Commissioner (A).
- Whether the activity of work wear rental falls under the category of supply of tangible goods so as to attract service tax ?
- The Tribunal relied on the Appellant’s own decision wherein it was held that work-wear was always in the control of appellant and hence there is no transfer of effective control by the appellant hence out of the purview of the deemed sale as per the Article 366 (29A)(d) of the Constitution 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.
- Thus, it was held that service in question is not taxable under supply of tangible goods for use or under the declared service.
- Accordingly, in appeal No. ST/11134/2019, the impugned order is upheld and Revenue’s appeal is dismissed and in appeal No. ST/10718/2021, the impugned order is set aside and Appellant’s is allowed.