Service provider wins as service tax demand set aside for material handling equipment and vehicle supply services

CESTAT Chandigarh set aside the service tax demand against a service provider who supplied material handling equipment, vehicles, and manpower to a manufacturing company. The tribunal held that the third SCN invoking extended limitation period was barred by limitation, as the department had prior knowledge of activities through earlier SCNs. On merits, the tribunal found that supply of tangible goods with operators without transferring possession fell under supply of tangible goods service (taxable from 16.05.2008), not business auxiliary service. Vehicle hiring with possession and control retained by appellant did not constitute rent-a-cab service. Appeal allowed.

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Issues involved:
The issues involved in the judgment are the demand of service tax on various activities carried out by the appellant for a company without obtaining Service Tax Registration, the sustainability of the impugned order, and the applicability of different categories of services for the activities performed.

Demand of Service Tax:
A show cause notice was issued to the appellant for providing services without obtaining Service Tax Registration, including 'Cargo handling Services', 'BAS', 'Manpower Recruitment & Supply Agency Service', and 'Erection Commissioning & Installation Services'. The appellant received an amount from the company involving service tax, which was demanded in the notice. The Adjudicating Authority confirmed the demand of service tax, interest, and penalty. The appellant appealed against this order, which was rejected by the Commissioner, leading to the present appeal.

Sustainability of the Impugned Order:
The appellant argued that the impugned order was not sustainable as it did not properly appreciate the facts and binding judicial precedents. The appellant provided various services to the company under written contracts, and previous show cause notices had been issued for similar activities. The appellant contended that the present show cause notice, invoking the extended period of limitation, was barred by limitation based on previous knowledge of the department. Legal judgments were cited to support this argument.

Applicability of Different Categories of Services:
The appellant argued that the activities performed did not fall under 'Business Auxiliary Service' but rather under 'supply of tangible goods service'. Various agreements and certificates were produced to support this claim. Legal precedents were cited to establish that the activities were taxable under specific categories introduced at a later date. The possession, control, and maintenance of vehicles provided for carrying out activities were also highlighted to demonstrate that they did not fall under Rent-a-cab service.

Judgment Summary:
The Tribunal found that the show cause notice demanding service tax for the period in question was barred by limitation as earlier notices had been issued for similar activities. The activities performed by the appellant were within the knowledge of the department, and the impugned order was set aside based on legal precedents regarding limitation periods and knowledge of authorities. The Tribunal also held that the activities did not fall under 'Business Auxiliary Service' but under 'supply of tangible goods service'. The certificates provided by the company were not considered by the authorities, and based on legal judgments, the impugned order was deemed erroneous both on merits and limitation grounds. Consequently, the appeal of the appellant was allowed with consequential relief, if any, as per law.

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