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of <h1>Machinery installation for production at client premises constitutes job work, not supply of tangible goods service</h1> <h3>Commissioner of C.E. & S.T. -Vadodara-I Versus Aravali Dentrifrices Pvt Ltd</h3> Commissioner of C.E. & S.T. -Vadodara-I Versus Aravali Dentrifrices Pvt Ltd - TMI Issues:Interpretation of deemed sale in job work arrangement for production of tangible goods, applicability of service tax on supply of tangible goods service, validity of Commissioner (Appeals) order, existence of genuine agreement for job work, consideration for supply of machine in job work arrangement.Analysis:The case involved a job work arrangement where the respondent undertook the production of toothbrushes and intermediate processes for two manufacturers. The Commissioner (Appeals) ruled the arrangement as a deemed sale, exempting it from service tax under 'supply of tangible goods service.' The Revenue challenged the order, arguing that the core issue of service supply was not addressed. The Revenue contended that the agreement presented was post-created and lacked essential details, rendering it non-existent during the transaction period. The Revenue cited legal precedents to support its argument.On the other hand, the Respondent argued that placing machines in the client's factory for production did not constitute 'supply of tangible goods for use service.' They highlighted that charges were solely for job work production, not for machine lease or rent. The Respondent referenced various judgments and circulars to support their stance.Upon review, the Tribunal found that the job work arrangement did not amount to a deemed sale. The respondent carried out the production process using their machines in the client's factory without charging for machine use separately. The Tribunal analyzed the rates schedule and invoices, concluding that the charges were for production activities, not machine lease. The Tribunal held that the transaction was job work, not 'supply of tangible goods for use service,' dismissing the Revenue's appeal and disposing of the cross objection.In conclusion, the Tribunal upheld the Commissioner (Appeals) decision, emphasizing that the transaction was job work and not subject to service tax under 'supply of tangible goods for use service.' The judgment was pronounced on 03.12.2024.
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