Rental supply of drill pipes without operator held outside taxable tangible goods service under control-based test.

Supply of drill pipes on rental basis was examined for taxability as supply of tangible goods service. The Tribunal found that the pipes were used independently by the recipient, with no engineer, operator, or technically competent personnel deputed by the supplier, and held that SES-based billing for actual use did not by itself show continued effective control or possession with the supplier. It also accepted that VAT had been paid on the transaction. On that basis, the Revenue's control-based objection failed and the demand was set aside.

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Issues: Whether supply of drill pipes on rental basis, without deputing any operator or expert manpower and with billing linked to actual usage through SES, amounted to taxable supply of tangible goods service on the footing that effective control and possession remained with the supplier.

Analysis: The Tribunal noted that the drill pipes were supplied for independent use by the recipient and that no engineer, operator, or technically competent person of the appellant was sent along with the pipes. It further held that the mere generation of SES to record actual use did not by itself establish that effective control and possession continued with the appellant. The Tribunal also accepted the appellant's stand that VAT had been paid on the transaction, and found the Revenue's control-based objection unsustainable in the absence of manpower at site.

Conclusion: The activity was not treated as taxable supply of tangible goods service on the Revenue's theory, and the demand was set aside in favour of the assessee.

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