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2019 (8) TMI 427 - AT - Service TaxNature of activity - service or sale - supply of Tangible Goods services or not - effective possession and control - cum-tax benefit - providing work-wear solution to the various industrial customers in terms of various agreements where there is transfer of effective control to the client - whether the transaction entered into between the appellant and the customer is transferring the right to use by the appellant or allowing the customer to use the work-wear? HELD THAT:- The agreement has the terms conditions with the customers for the lease the work-wear from the appellant and the appellant owns the lease product, will have exclusive right to wash the work-wear and also the Noticee shall have exclusive right to serve the work-wear - It is necessary to have transfer of right to use involving both transfer of possession and also effective control of the goods by the user of the goods. The transaction for allowing another person to use the goods without giving legal right of possession cannot be treated as deemed sale of the goods, and thus has to be treated as service only. It is also the contention of the Department that after introduction of the negative list based tax regime, the activity of the supply of goods without transfer of right liable to tax by virtue of Section 66E (f) of Finance Act. The similar issue come up for consideration before this Hon’ble Tribunal in case of M/S. GIMMCO LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX, NAGPUR (VICE-VERSA) [2016 (12) TMI 394 - CESTAT MUMBAI]. The issue involved in that case was regarding the renting of earth moving equipments to various Customers by the M/s Gimmco Limited and based on the clauses in the agreement, there was restriction of use by the lessee as skilled workers to operate the equipment was being provided by the lessor and maintenance and repair of the equipments were also by the lessor and it has been held that there is no service involved in this case. It is evidently clear that the some of the activities of regarding the maintenance and washing of work-wear rented to the clients, by the appellants will not mean that effect control as been retained by the appellant - in the instant case, in terms of agreement work-wear rented out always remains within the exclusive possession of their clients and nobody else can use the those workwear at the same time and hence effective control to lie with the user/ clients. The appellant, therefore, does not have control over the use of the work-wear. Thus the activity is not in the nature of ‘service’ under the Finance Act in both during the period prior to negative list regime and thereafter as held in the impugned order. Appeal allowed - decided in favor of appellant.
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