ST & Cart before the bullock story
YOU may have heard about the idiom ‘putting the cart before the horse'. That's old now.
After the entry of the new category of service viz. "supply of tangible goods for use", the "horse" in the idiom may probably be required to be replaced by the "bullock".
Confused?................read further.
In the case of Sahakar Maharshi Shankarrao Mohite Patil SSK Ltd. vs. CCE, Pune-III (), the Bench had observed thus -
"6. The issue is whether giving bullock-carts on consideration amounts to supply of tangible goods service. As per the definition of tangible goods service it includes machinery, equipment and appliances. Bullock-carts prima facie cannot be considered as machinery, equipment or appliances. In view of this, the applicants have made out a case for total waiver for hearing of the appeal."
Accordingly, the CESTAT had allowed the Stay petitions but not before noting that since the Commissioner(A) had not decided the case on merits, the matter was required to be remanded and it was ordered accordingly.
We do not know what the factual position was - i.e whether the "bullock-carts" were without the bullocks or otherwise. In fact, if it had been without "bullocks", Revenue would not have used the word "bullock-carts" but only "carts".But did the Revenue officials see the bullocks or the carts or both?
Be that as it may, in the present case, it is alleged that the appellant rented out "bullock carts" to the farmers for transportation of the sugar cane to the appellant's factory. The department, therefore, took the view that the said activity is liable to Service Tax under the category of ‘Supply of Tangible Goods for Use' and accordingly confirmed a Service Tax demand of Rs.1,32,117/- during the period 16.05.2008 to 31.12.2009 along with interest thereon and also imposed penalties.
The appellant preferred an appeal before the lower appellate authority who dismissed the appeal thereby giving credence to the Revenue allegation that the bullocks led from the front.
Before the CESTAT, the appellant submitted that they have supplied only carts. It is further submitted that neither did they supply bullocks to the farmers nor did they provide any person to ride the cart and, therefore, the effective control and possession does not lie with the appellant and, therefore, renting of bullock carts [probably the right term may be carts for bullocks] will not come under the purview of said services.
The Tribunal decision cited above was also relied upon.
The Revenue representative obviously had not seen either the bullock or the cart so he chose to reiterate the findings of the lower authorities.
The Bench observed -
"5.1 As per section 65(105)(zzzzj) of the Finance Act, 1994, "Taxable Services" means any service provided or to be provided to any person, by any other person in relation to supply of tangible goods including machinery, equipments and appliances for use, without transferring the right of possession and effective control of such machinery, equipments and appliances'. In other words, the right of possession and effective control over the goods should remain with the service provider. When the bullock carts are supplied without the bullocks, the possession and control over the cart does not lie with the service provider. Therefore, mere activity of renting of bullock cart does not come within the purview of ‘Supply of Tangible Goods for use Service'."
In fine, the appeals were allowed.