Transactions of chartering vehicles & vessels held as sales subject to VAT, not service tax. Appellant prevails.

The Tribunal held that the transactions involving chartering vehicles and vessels were deemed sales subject to VAT, not services liable to service tax. The appellant's argument that the transfer of effective control and possession qualified as deemed sales was supported by examining agreements and judicial precedents. As the appellant had paid VAT on these transactions, they were not liable for service tax. The impugned orders were set aside, and all appeals were allowed with consequential relief.

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Issues Involved:

1. Service tax liability on chartering vehicles and vessels.
2. Classification of transactions as 'deemed sale' or 'service.'
3. Applicability of VAT versus service tax.

Summary:

1. Service Tax Liability on Chartering Vehicles and Vessels:
The appellant provided cargo handling and port handling services, among others, and chartered vehicles and vessels without paying service tax, claiming the transactions were deemed sales. The authorities issued show cause notices for the period 2010-11 to 2014-15, demanding service tax under the category of 'Supply of Tangible Goods Services' as per Section 65(105)(zzzzj) of the Finance Act, 1994.

2. Classification of Transactions as 'Deemed Sale' or 'Service':
The appellant argued that the transactions were deemed sales subject to VAT under the Gujarat VAT Act, 2003, as they involved the transfer of effective control and possession. They cited various agreements and judicial precedents to support their claim. The Tribunal examined the agreements and found that the right of possession and effective control were indeed transferred to the charterers, making the transactions deemed sales and not services.

3. Applicability of VAT Versus Service Tax:
The Tribunal referred to the C.B.E. & C. Circular No. 334/1/2008-TRU and various judicial decisions, including the Hon'ble Supreme Court's ruling in the case of UFO Moviez India Ltd., which clarified that transactions involving the transfer of possession and control are deemed sales liable to VAT, not service tax. The Tribunal concluded that since the appellant had paid VAT on these transactions, they were not liable for service tax.

Conclusion:
The Tribunal set aside the impugned orders, holding that the transactions were deemed sales subject to VAT and not services liable to service tax. All appeals were allowed with consequential relief as per law.

(Pronounced in the open court on 25.08.2023)

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