2026-VIL-94-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax – Warehouse related services – Demand of tax – Appellant is engaged in manufacture of automative fasteners – During scrutiny of records, department found that Appellant had incurred expenses towards warehouse related services in USA and have also realized lease income for renting out their windmills to their group company – Department issued show cause notices proposing demand of Service Tax under various categories – Adjudicating Authority confirmed demands proposed in show cause notice – Appellate Authority upheld order passed by Adjudicating Authority – Whether demand of tax for services rendered by service providers in USA are exigible to tax at hands of Appellant under reverse charge mechanism – HELD – It is an admitted position that services provided to Appellant are rendered by service providers in USA and are received and consumed in said country. Proposal is to classify such services as Business Support Services. Logistics services are more appropriately classifiable under clearing and forwarding agency services. Orders impugned in appeals, which sustain the demand of service tax under Business Support Service on Appellant, are untenable and are liable to be set aside – Appeals allowed - Letting out of windmills – Tax liability – Whether income earned by letting out the windmills by Appellant is exigible to tax as renting of immovable property – HELD – Proposal in show cause notice itself is to treat windmills as a ‘factory’, since Appellant had considered these as assets in their books of accounts. Show cause notice is vague and had not put Appellant to notice as to why mere treatment of windmills as assets would warrant such windmills to be treated as a ‘factory’ and that it would tantamount to renting of immovable property. Surmise of Appellate authority that windmills are permanently embedded is without any evidence, especially when all along the Appellant’s contention has been that these are excisable goods which can be removed and re-erected at any other place, which is not seen disproved. Demand made on leasing of windmills, treating it as renting of immovable property, is untenable.
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