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2022 (8) TMI 105 - HC - Service TaxNature of activity - sale or service - whether the activity carried on by the petitioner in the hair studio, constitutes sale of a product, being a wig, or service of preparation of wig and fitment thereof? - whether the intrinsic or dominant nature of the transaction is one of sale of a wig or rendition of service? - HELD THAT:- The authority proceeds on the basis that none of the exceptions, including (i) transfer of title in goods or immovable property (ii) deemed sale (iii) a transaction in money (iv) actionable claim, would apply in the instant case. He, thus, proceeds to bring the entirety of the turnover as per the balance sheet of the petitioner, reducing there from, the sale value of the laser combs that have been offered to tax at 14.5% VAT, to tax as service. The petitioner must succeed. Without question, the integral component of the transaction in the present case is the wig itself, as without the wig, there would be no transaction perse. The fitment of the wig and the preparation of the scalp to receive the wig is, in my view, incidental to the product itself - The primary activity carried on by the petitioner is the manufacture of the wig, for which it remits central excise duty. The fitment of the wig, including the preparation of the scalp, and optional maintenance of the wig itself, are incidental to the product. The Hon’ble Supreme Court, in the case of IMAGIC CREATIVE PVT. LTD. VERSUS COMMISSIONER OF COMMERCIAL TAXES & ORS. [2008 (1) TMI 2 - SUPREME COURT], has specifically noted the difference between a composite contract and an indivisible one. A composite contract is one that would involve components of sale and service whereas an indivisible contract, also involving components of sale and service, is one where the distinction between the two is very fine and difficult to determine. Thus, a client could well purchase a wig without opting for the service of fitment or maintenance. The services of preparation of the scalp, fitment as well as maintenance of the wig, are merely to facilitate and aid in the utilization of the product and would have no relevance in the absence of the wig - petition allowed.
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