Supply of Material Handling Equipment Not Taxable Under Support Service: Tribunal Decision

The Tribunal allowed the appeal, ruling that the supply of material handling equipment was not taxable under "Support Service of Business or Commerce" but fell under the category of "supply of tangible goods" introduced from 16.05.2008. The decision provided consequential benefits to the appellant in accordance with the law.

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Issues Involved:
- Service tax liability on supply of tangible goods before and after 16.05.2008
- Classification of activity under "Support Service of Business or Commerce"

Analysis:

Issue 1: Service tax liability on supply of tangible goods before and after 16.05.2008
The appeal was filed against an Order-in-Original demanding service tax for the period between 1st May, 2006 to 10th March, 2008. The Department argued that the appellant evaded payment of service tax by not registering under the service tax category of "Support Services of Business or Commerce" for providing material handling services. The appellant contended that service tax on "supply of tangible goods" came into effect from 16.05.2008, and prior to that, such services were not taxable. The Tribunal agreed with the appellant, stating that the introduction of a new category of service for "supply of tangible goods" from 16.05.2008 indicated that such activities were not previously covered under service tax. The Tribunal held that the supply of tangible goods cannot be considered as "Support Service of Business or Commerce."

Issue 2: Classification of activity under "Support Service of Business or Commerce"
The Department tried to classify the appellant's activity under "Support Service of Business or Commerce" as logistic support to various business establishments. However, the Tribunal, after analyzing the definition of "Support Service of Business or Commerce" under Section 65(104c) of the Finance Act, 1994, concluded that the supply of material handling equipment like cranes does not fall under this category. The Tribunal referred to previous judgments and held that providing equipment on rent cannot be considered as infrastructural support service. The Tribunal also cited the Bombay High Court judgment, emphasizing that the introduction of a new entry for services implies that those services were not previously taxable. Consequently, the Tribunal set aside the Order-in-Original dated 23.03.2009, ruling in favor of the appellant.

In conclusion, the Tribunal allowed the appeal, stating that the activity of supplying material handling equipment was not taxable under "Support Service of Business or Commerce" but fell under the category of "supply of tangible goods" introduced from 16.05.2008. The decision provided consequential benefits to the appellant in accordance with the law.

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