Transfer of possession and control excludes leased equipment from supply of tangible goods service tax.

Leasing of gas production units and storage equipment was outside the taxable service of supply of tangible goods for use because the service entry applies only where goods are made available without transfer of possession and effective control. The equipment was installed at customers' premises, customers were entitled to use it during the lease period, and the contractual terms showed transfer of possession and control. The transaction was also treated as a transfer of right to use goods and subjected to VAT, reinforcing its character as a deemed sale rather than a taxable service. The circular on the scope of the entry supported this reading, so the service tax demand was not sustainable.

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Issues: Whether leasing of gas production units and storage equipment, with possession and effective control transferred to customers, falls within the taxable service of supply of tangible goods for use.

Analysis: The taxable entry covered supply of tangible goods only where the goods were made available without transferring right of possession and effective control. On the facts, the equipment was installed at the customers' premises, the customers had the liberty to use the equipment during the lease period, and the contractual terms showed transfer of possession and control. The activity was also treated as a transfer of right to use goods and was subjected to VAT, which supported the conclusion that the transaction was a deemed sale. The circular on the scope of the service likewise clarified that transactions involving transfer of possession and control, and on which VAT was payable or paid, were outside the service tax entry.

Conclusion: The activity did not amount to supply of tangible goods for use and service tax demand was not sustainable.

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