The facts of the case are that the appellant are registered under the provisions of Finance Act, 1994 with Service Tax Office, Nagpur under the service categories of “Advertising Agency”, “Business Auxiliary Services” and “Insurance Auxiliary Service”. During the departmental audit for the period from July, 2008 to February, 2011 and March, 2011, it was revealed that the appellant have not paid Service Tax under the category “Supply of Tangible Goods Service” amounting to Rs. 3,96,284/- on rent received from specially designed trucks rented to Jaika Automobiles and Finance Pvt. Ltd., Raipur. The case of the department is that the renting of trucks to the lessees is the service falls under supply of tangible goods therefore it is liable to Service Tax under the category of “Supply of Tangible Goods Service”. The adjudicating authority confirmed the demand and the learned Commissioner (Appeals) upheld the same, therefore the appellant are before us.
2. Shri Shailendra Jain, learned Counsel appearing on behalf of the appellant submits that the show-cause notice dated 17.10.2013 was issued for the demand pertaining to the period 2008-09 to 201011, accordingly the extended period was invoked while confirming the demand, however there was no whisper regarding the ingredient required to invoke proviso to Section 73(1) of Finance Act, 1994. Even in the proposal of the show-cause notice the demand was raised under Section 73 and not under proviso to Section 73(1), therefore in absence of any charge of suppression, fraud, collusion, misstatement, etc., the demand for longer period is time bar. Since the entire period is beyond the normal period of one year of the show-cause notice, it is required to be set aside being time bar. As regard merit of the case, he submits that the appellant have rented out the trucks to the various lessees without driver and no any other facility provided by the appellant, therefore after renting out the trucks the effective control transferred to lessees. Therefore, the service per se does not fall under the category of “Supply of Tangible Goods Service”, hence the same is not taxable under the said head. He placed reliance on the judgment of this Tribunal in the case of Praveen Engineering Works Vs. Commissioner of Service Tax, Raigad – 2014 (33) STR 719 (Tri.-Mumbai).
2. Shri Atul Sharma, learned Assistant Commissioner (A.R.) appearing on behalf of the Revenue reiterates the finding of the impugned order. He further submits that the judgment relied upon by the learned Counsel in the case of Praveen Engineering Works (supra) has been dealt with by the adjudicating authority and the same was not given credence for the reason that the matter was remanded to the adjudicating authority for fresh adjudication, therefore the said judgment did not decide the issue finally.
3. We have carefully considered the submissions made by both sides and perused the records. We find that the Revenue has demanded the Service Tax on the renting of trucks under the head of “Supply of Tangible Goods Service”. As per the facts of the case which is not in dispute, we note that the appellant have given the trucks to the lessees on monthly rental charges. The appellant did not provide any facility such as driver, repair and maintenance, fuel etc. Once the truck is rented out the entire possession and control is of the lessees and during the renting period there is no interference of the appellant. The adjudicating authority analyse the legal provision which is given in para 5.7 is reproduced below:-
“5.7 That, from the analysis of above provision it becomes clear that in order to attract levy of tax under “Supply of Tangible Goods Service” following three ingredients must be present:-
(a) The service essentially has to be in relation to supply of tangible goods to any person by any other person;
(b) There must not be any transfer of right of possession of the goods from the service provider to the service recipient;
(c) There must not be any transfer of effective control of the goods from the service provider to the service recipient.
Hence if all the above 3 conditions are fulfilled in a commercial transaction than only it would be liable to Service Tax.”
From the above observation of the adjudicating authority, he himself laid down 3 criteria for classification under “supply of tangible goods service”. As discussed the above, the right of possession of the goods and effective control have been transferred from the service provider to service recipient. Therefore the ingredient (b) & (c) observed by the adjudicating authority are absolutely incorrect. If that be so the test for classifying the service under “Supply of Tangible Goods Service” fails. Admittedly during the lease period of truck the right of possession of truck and effective control have been transferred to service recipient, therefore the service does not fall under the “Supply of Tangible Goods Service”. Accordingly the demand does not sustain.
4. As regard limitation, we observe that the show-cause notice in the main body does not make any allegation that the appellant have suppressed the fact or fraud or collusion or misstatement etc. and even in the proposal also the demand was raised under Section 73 and proviso to Section 73(1) which requires to demand for the longer period was not invoked. Therefore the adjudicating authority confirming the demand for the extended period is clearly beyond the show-cause notice, hence the demand for the longer period could not sustain. In this fact the demand also does not survive on the ground of time bar. As regard the judgment of this Tribunal relied upon by the learned Counsel and opposed by the learned AR in the case of Praveen Engineering Works (supra), since we have decided the issue on the merit as per our own observation and analysing the definition of “Supply of Tangible Goods Service” and demand is also time bar, we do not need to consider the said judgment, accordingly the impugned order is set aside. The appeal is allowed.