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TMI Blog2025 (3) TMI 1061X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices India Pvt Ltd (hereinafter referred to as the Respondent), and demand of Rs.3, 58, 686/- has been upheld. The department is in appeal against the impugned order only to the extent of setting aside of demand of Rs.1, 12, 09, 920/- on account of service tax under the category of 'Supply of Tangible Goods service' (SOTG). 2. The facts of the case, in brief, are that the department, based on scrutiny of the ST3 returns of the respondent, noticed certain issues including non-payment of service tax on amounts received on leasing of "workwear" to certain companies like M/s Gland Pharma Ltd & M/s Novartis Healthcare Pvt Ltd. It was noticed that the respondents were supplying workwear on lease basis, which included its related services like ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e exclusivity clause for maintenance and washing of workwear is to enhance durability as they understand the maintenance requirement fully. He has also relied on the decision of the Coordinate Bench of this Tribunal in the GMMCO case [2013 (31) STR 675 (Tri-Mum)] and on the judgment of Hon'ble High Court of Andhra Pradesh in the GS Lamba case [2012-TIOL-49- HC-AP-CT]. He also took into account that VAT has been paid on the impugned transaction as deemed sale. 4. The department mainly highlighted various conditions and provisions in respect of agreement with M/s Novartis Healthcare Pvt Ltd & M/s Gland Pharma Ltd to contest that in the said transaction, there is no transfer of right to use and it is merely allowing another person to use the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvolves manual labour. Often those employed within trade industries elect to be outfitted in workwear because it is built to provide durability and safety. Learned AR reiterates the grounds of appeal to support the department's view that in view of the transaction and in respect of terms and conditions of the agreement, there is clearly no transfer of effective control and possession to the customers and therefore, the transaction would clearly fall within the purview of service under the category of SOTG service for the period prior to 30.06.2012 and thereafter as 'declared service' and is not a case of deemed sale. 5. On the other hand, learned Advocate for the respondent, apart from reiterating their grounds that there has been an effec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs to use their goods and the respondents are keeping effective control of said goods then it would fall within the category of SOTG service, however, if the transfer of goods on lease involves both transfer of effective control and possession to the customer, then it would be covered within the category of 'deemed sale' and therefore, not liable to service tax. It is also noted that both the sides have argued that whether the transaction is that of deemed sale or that of service can be decided based on the BSNL judgment by Hon'ble Supreme Court and the parameters enumerated therein to come to the conclusion as regards transfer of effective control and possession. While the department has highlighted some provisions to say that effective co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redeemed at agreed upon price. (vi) The leasing fee and other charges are based on the current price of the work-wear. (vii) If the Customer withdraws from the contract at any time, he shall pay to Lindstrom the invoicing value of the termination period. (viii) Retail Price will increase every year by 10%. (ix) Service Fee of the Garment included in the price. (x) VAT is being charged on the rental charges. (see invoice) There are separate provisions for pricing of replacement and valuation of redemption price. These conditions have been briefly noted at internal page 2 of the impugned SCN." 9. The Tribunal, thereafter, held that some of the activities regarding maintenance and washing of workwear rented to the clients ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement discussed by the Chandigarh Bench as well as Chennai Bench are different than the terms and conditions in the present appeal. It is also not in dispute that in both these orders, the concerned Bench had examined the terms and conditions of the agreement, as also the BSNL judgment, to come to the same conclusion that the transactions are not in the nature of service and therefore, not liable to service tax both prior to 30.06.2012 as well as thereafter. We do not find any substantive ground to differ with the views expressed by the Coordinate Benches in respect of the similar agreements in respect of same appellant. Therefore, having regards to the judgments cited by the respondent in support that there is no leviability of service t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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