Tribunal rules services not taxable under 'Support Service of Business or Commerce' but under 'support of tangible goods'

The Tribunal ruled in favor of the appellant, holding that the services provided did not fall under the category of 'Support Service of Business or Commerce' but rather under 'support of tangible goods' with effect from 16.5.2008. Consequently, the demand for service tax for the period before 16.5.2008 was deemed non-taxable under the Finance Act, leading to the setting aside of the impugned order in favor of the appellant.

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Issues:
Non-payment of service tax on services rendered by the appellant.

Analysis:
1. The issue involved in this case pertains to the non-payment of service tax on services provided by the appellant, specifically related to the supply of hydra cranes and material handling equipment on a hire basis. The Revenue attempted to levy service tax under the category of "Support Services of Business or Commerce" on the pretext that the services rendered by the appellant fell under the scope of 'logistic service infrastructure support' service.

2. The appellant contended that they were not providing 'business support service' but were engaged in the supply of tangible goods, which became taxable from 16.5.2008 onwards. The appellant argued that prior to this date, there was no service tax leviable on the supply of tangible goods without transferring the right or possession thereof. The appellant relied on the judgment of the Hon'ble Bombay High Court to support their argument that the introduction of a new entry under the Finance Act indicated that such services were not previously within the purview of service tax liability.

3. The Tribunal examined the definition of 'Support Service of Business or Commerce' under Section 65(104c) of the Finance Act, 1994, which primarily includes services related to business operations and logistics support. The Tribunal found that the supply of cranes and material handling equipment did not fall within the ambit of 'Support Service of Business or Commerce' as defined. The Tribunal also referenced a previous decision where it was established that providing equipment on rent did not align with infrastructural support services.

4. The Tribunal further supported its decision by citing the judgment of the Hon'ble Bombay High Court, which emphasized that the introduction of a new entry in the tax law implied that services previously not covered under any entry were not taxable. Therefore, the Tribunal concluded that the services provided by the appellant did not fall under the category of 'Support Service of Business or Commerce' but rather under 'support of tangible goods' with effect from 16.5.2008. Consequently, the demand for service tax for the period before 16.5.2008 was deemed non-taxable under the Finance Act, leading to the setting aside of the impugned order in favor of the appellant.

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