Order Date: 8 July 2022

Facts-

• The Petitioner, White Cliffs Hair Studio Pvt Ltd is a Hair Studio stated to be engaged in Non-surgical Hair Replacement/Cranial Prosthesis for persons who have suffered hair loss.
• The department observed that the services attract Service tax as the activity would fall squarely within the definition of service under Section 65B(44) of the Finance Act, 1994.
• The impugned order is an order-in-original and hence amenable to statutory appeal. Thus, respondent urge that the Court apply the bar of alternate remedy and relegate the petitioner to first appeal.
• The petitioner contended that the wig is an essential component of the transaction, as there would be no transaction without the wig.

Issue-

• Whether the transaction's intrinsic or dominant nature was that of a wig sale or a rendition of service?

Order-

• The single bench judge of Hon’ble High Court observed that the primary activity is the manufacture of the wig, for which the central excise duty is remitted. The fitment of the wig, including the preparation of the scalp and optional maintenance of the wig itself, is incidental to the manufacturing and supply of the wig.
• The Court relied on the decision of Supreme Court in the case of Imagic Creative Pvt. Ltd. Vs. Commissioner of Commercial Taxes, wherein the Supreme Court has specifically noted the difference between a composite contract and an indivisible one. A composite contract is one that would involve components of sale and service whereas an indivisible contract, also involving components of sale and service, is one where the distinction between the two is very fine and difficult to determine.
• The Court held that a client could well purchase a wig without opting for the service of fitment or maintenance. The services of preparation of the scalp, fitment as well as maintenance of the wig, are merely to facilitate and aid in the utilization of the product and would have no relevance in the absence of the wig.
• The writ petition is allowed.