TaxTMI 
TaxTMI 
2016 (12) TMI 394
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....Finance Act, 1994 at appropriate rate on the aforesaid amount of Service Tax recoverable fro the Noticee. iv. I hereby impose a penalty of Rs. 5000/- on the Noticee under Section 77 of the Finance Act, 1944 for contravening the provisions of Finance Act, 1994/Service Tax Rules, 1994. v. Additional fee @ Rs. 2,000/- Per Return is recoverable from the Noticee under Rule 70 of the Service Tax Rules for delay in filing ST-3 return. vi. I hereby impose a penalty of Rs. 67,39,694/- on the Noticee under Section 78 of the Finance Act, 1994 for suppressing the value of taxable services with malafide and premeditated intent to evade payment of service tax which has resulted into short payment of Service tax. However, the Noticee is given an option to pay only 25% of this penalty amount subject to condition that entire amount of Service Tax and interest along with the 25% penalty under Section 78 are paid within thirty days of communication of this order." 2. The fact of the case is that the assessee M/s GIMMCO Ltd. is inter alia engaged in renting of earthmoving equipment, such as Caterpillar, Excavators, etc. to various customers. The appellant did not discharge any servic....
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....evy would fall on "right to use goods, in cases where VAT is not leviable". In the Budget instructions vide circular MF (DR) 334/1/2008-TRU, dated 29-2-2008, it was clarified that "supply of tangible goods for use" leviable to VAT/sales tax as deemed sale of goods, is not covered under the scope of the proposed service". Hence service tax liability is not attracted in the assessee's case. In the service tax provisions effective from July 2012, service has been defined in Section 65B(44) and as per the said definition, service does not include an activity which constitutes transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of Article 366 of the Constitution. In the leasing transaction undertaken by the appellant, the legal right of possession or effective control remains with the lessee and the transaction is only "transfer of right to use". The Hon'ble High Court of Andhra Pradesh in the case of G.S. Lamba & Sons v. State of A.P. reported in 2012-TIOL-49-HC-AP-CT, in a case relating to hiring of Transit Mixers, held that the transaction amounts to transfer of right to use goods and leviable to sales tax. The ratio o....
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....etary rights, title or interest in the equipment. (v) The Senior Manager of the assessee's firm in his statement dated 29-6-2010 recorded under Section 14 of the Central Excise Act, 1944 had clearly admitted that the assessee did not transfer the title of rented machinery to their client and the legal possession of the equipment remained with the assessee. (vi) The C.B.E. & C. in the circular dated 29-2-2008 had clarified that "transaction of allowing another person to use the goods, without giving legal right of possession and effective control, not being treated as sale of goods, is treated as 'service'. Since in the present case, effective control, possession and custody of the equipment remained with the assessee, the contract is a service contract and does not involve the transfer of right to use and hence liable to service tax under the category of "supply of tangible goods for use". Accordingly he pleads for sustaining the demand. As regard revenue's appeal, he reiterates the grounds of appeal. He further submits that the activity of the assessee is not only limited to renting of equipments but involves various other services such as assessee is under....
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....ges provides for compensation to be paid by the hirer to the assessee in case of damage to the equipment during the period of use. These responsibilities cast on the hirer clearly show that the right of possession and effective control of the equipment rest with the hirer; otherwise the hirer cannot be held responsible for misuse/abuse, safe custody/security, liability to settle disputes with third parties in relation to use etc. Further Cl. 4.3 of the agreement provides for charging of VAT at 12.5% on the monthly invoice value which shall be payable by the hirer. These terms and conditions stipulated in the agreement, lead to the conclusion that the transaction envisaged in the agreement is one of "transfer of right to use" which is a deemed sale under Section 2(24) of the Maharashtra Value Added Tax Act, 2002. The Finance Minister's speech and the budget instructions issued by the C.B.E. & C. also clarify that if VAT is payable on the transaction, then service tax levy is not attracted. 5.3 A similar issue arose for consideration before the Hon'ble High Court of Andhra Pradesh in the G.S. Lamba case cited supra. The petitioners therein entered into a contract with M/s. Grasim,....