Tribunal rules in favor of appellant, finding Service Tax demand unsustainable under 'Supply of Tangible Goods Service' criteria.

M/s Satish Kumar & Co. Versus Commissioner of Central Excise, Nagpur

M/s Satish Kumar & Co. Versus Commissioner of Central Excise, Nagpur - 2019 (22) G. S. T. L. 269 (Tri. - Mumbai) Issues:
- Demand of Service Tax under the category of 'Supply of Tangible Goods Service'
- Invocation of extended period for demand
- Interpretation of legal provisions for classification under 'Supply of Tangible Goods Service'
- Allegations of suppression, fraud, collusion, misstatement for extended period demand
- Consideration of precedent judgment in Praveen Engineering Works case

Analysis:

The case involved a dispute regarding the demand of Service Tax under the category of 'Supply of Tangible Goods Service' for a period from July 2008 to March 2011. The appellant, registered under the Finance Act, 1994, had rented out specially designed trucks to a company without providing additional facilities such as drivers or maintenance. The Revenue contended that the renting of trucks constituted a service falling under the category of 'Supply of Tangible Goods Service' and was therefore taxable. The adjudicating authority and the Commissioner (Appeals) upheld the demand, leading to the appeal before the tribunal.

The appellant argued that the demand for the extended period was time-barred as there were no allegations of suppression, fraud, collusion, or misstatement in the show-cause notice. Additionally, the appellant contended that the service provided did not fall under the category of 'Supply of Tangible Goods Service' as the possession and control of the trucks were transferred to the lessees, negating the criteria for classification under the said service. The appellant relied on a previous judgment by the tribunal in a similar case to support their argument.

The Revenue, represented by the Assistant Commissioner, reiterated the findings of the impugned order and dismissed the relevance of the appellant's cited precedent judgment, emphasizing that the matter was remanded for further adjudication.

Upon careful consideration of the submissions and records, the tribunal analyzed the legal provisions for classification under 'Supply of Tangible Goods Service.' The tribunal noted that the possession and effective control of the goods had indeed been transferred to the lessees during the rental period, contradicting the criteria set out by the adjudicating authority for classification under the said service. Consequently, the demand for Service Tax under the category of 'Supply of Tangible Goods Service' was deemed unsustainable.

Regarding the limitation issue, the tribunal found that the demand for the extended period was beyond the scope of the show-cause notice, as no allegations of suppression or fraud were made. Therefore, the demand for the longer period was considered time-barred. As the tribunal resolved the case on its own merit and due to the time-barred nature of the demand, the relevance of the precedent judgment was deemed unnecessary, leading to the setting aside of the impugned order and allowing the appeal.