Lindstrom Service India (P) Ltd. v. CCE & ST

FINANCE ACT, 1994

--Supply of tangible goods for use--Work-wear leased out pursuant to agreementLevy of service tax----Where in terms of agreement work-wear rented out, the effective control lay with the user/clients and assessee did not have control over the use of the work-wear, the activity was not in the nature of 'service', so as to be taxable under “supply of tangible goods for use”. --Assessee was a subsidiary of an overseas company and was engaged in leasing work-wear to their clients on the conditions mentioned in the Agreements with them. Issue arose for consideration, as to whether the transaction entered into between assessee and industrial customers was transferring the right to use or allowing the customer to use the work-wear. Held: Some of the activities regarding the maintenance and washing of work-wear rented to the clients, by assessee will not mean that effective control was retained by assessee. In the instant case, in terms of agreement work-wear rented out always remained within the exclusive possession of assessee's clients and nobody else could use the said work-wear at the same time. Thus, effective control lay with the user/clients and assessee did not have control over the use of the work-wear. The activity was not in the nature of 'service'.