The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad Bench comprising Ramesh Nair, Judicial Member and Raju, Technical Member observed that no Service Tax on Lindstorm Services India for Leasing of Work-wear.
The appellant, Lindstorm Services India Private Limited, is a subsidiary of Lindstrom OY Finland and is engaged in leasing workwear (uniform) to their clients on the conditions mentioned in the agreements with their clients.
On the basis of the agreement, it appears that the appellant is engaged in supply of Work-wear on rent/ lease basis as per the requirement of each customer. The activity rendered by the appellant includes renting/ leasing of Workwear, washing, maintenance, repairing, alteration, designing of Workwear, providing lockers and transportation of Work-wear.
The revenue after discussing the definition of ‘Supply of Tangible Goods Service’ as incorporated in Section 65(105)(zzzzg) before the introduction of negative list and definition of ‘Service’ under Section 65(B)(44) read with declared service under Section 66 of Finance Act, 1994, it appears that the nature of services involved supply of Work-wear for use while transferring possession only without transferring rights of effective control and thus appeared to be falling under the scope of declared service.
Accordingly, the adjudicating authority was of the opinion that since the effective control of the goods has not been transferred, the activity of leasing of Work-wear falls under the category of taxable service i.e. supply of tangible goods service prior to introduction of negative list and declared service post negative list regime, therefore, the demand of service tax was dropped.
The Bench relied on the decision of the Chandigarh Bench wherein it was observed that “In terms of agreement work-wear rented out always remains with the exclusive possession of their clients and nobody else can use those work wear 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”
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