TaxTMI 
TaxTMI 
2017 (6) TMI 58
X X X X Extracts X X X X
X X X X Extracts X X X X
....me treating the same as "export of services". But Revenue claims that the said services provided by the assessee are covered under "Business Auxiliary Service" (BAS) as defined in Section 65 (19) (i) read with Section 65 (105) (zzb) of the Finance Act, 1994 and are accordingly liable to service tax. (ii) Further during the course of audit, Revenue observed that assessee - appellant received hiring charges for hiring-out industrial endoscopes on which service tax is payable under the category of 'supply of tangible goods for use service'. The assessee appellant gave equipment on rent to various clients for a day-or- two and received rent for the same. Revenue's stand is that the activity undertaken by the assessee falls under "Supply of Tangible Goods Service" as defined under Section 65 (105) (zzzzc) of the Finance Act, 1994, and therefore, the income received as rent on hiring out the industrial endoscope to their clients is liable to service tax. The amount of service tax involved here is Rs. 60,255/-. 3. With above background, we have heard both sides represented by ld. Counsels, Shri B.L. Narasimhan, Shri Narender Singhvi and Shri Amresh Jain. 4. From the facts ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....son A for some other person B for some consideration and this activity by A may affect some other persons C, D and E in some manner, good or bad, the persons C, D and E are the person affected by the service, they cannot be treated as service recipient the service recipient would be B who has paid for the service and whose need has been satisfied by the provision of service. The only situation where in respect of some service provided by A which was ordered and paid for by B, a person C who has benefited from the service, can be treated as service recipient, when B has acted purely as an agent of C. Therefore in respect of services covered by Rule 3 (1) (iii) of the Export of Service Rules, 2005, which are the service in relation to business or commerce, the same provided by a person in India for use in relation to business or commerce would be treated received outside India and hence, exported, if - (i) the services have been provided on the instruction of a person located outside India for use in his business ; (ii) payment for those services has been made by him in convertible foreign exchange and it is he who has used the service to satisfy the need of his business. It wo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ness or commerce, has been provided by a person in India to a company located abroad, not having any branch or establishment in India, for use in its business, the service provided in India shall be treated as export, if the payment has been received in convertible foreign exchange. The performance of such service in India, would not make them received/consumed in India, if beneficiary user/recipient of said service provided in relation to business or commerce, who has paid for these service and has used the service in his business, is located abroad. The position would be different if the company located abroad who has paid for the service, also has some branch/ project in India and the service provided in India is meant for that branch/project - only in that case, the consumption of service would be in India and the service would be taxable in India. But if the recipient company located abroad, has no branch or project or establishment in India and the service covered by Rule 3 (1) (iii) provided in India is meant for use in the business of the company located abroad, it would be export of service. 8.6 In view of the above discussion, the Board"s Circular No. 141/10/2011 dated ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n with the assessee; that is why it is not a sale but is covered under the category of "supply of tangible goods for use service" for which, service tax is liable to be paid. The main point is that if effective control and possession of goods has been passed on to the customer, then it may come under the category of sale otherwise the subject activity would be covered under the category of "supply of tangible goods for use service". Each and every transaction, therefore, is required to be examined independently. If in any- one transaction, no operator has accompanied the endoscope and the customer handles the endoscope taking its effective control and possession, then it may be called a temporary sale. But if in any transaction, endoscope is accompanied by an operator, where the effective control and possession lies with the operator, such transaction would be covered by the "service of supply of tangible goods for use". Therefore, this issues needs examination transaction-wise at the level of original adjudicating authority, who shall decide the matter after giving necessary opportunity of personal hearing and of submission of documentary evidence to the assessee. The matter, cons....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Supreme Court"s decision in the case of BSNL vs. Union of India 2006 (2) S.T.R. 161 (S.C.), which mentions - "what are the attributes for treating a transaction as transfer of rights to use the goods" The Hon'ble Supreme Court in the said case on this issue interalia observes as under:- "90. The entire infrastructure/ instruments/ appliances and exchange are in the physical control and possession of the petitioner at all times and there is neither any physical transfer of such goods nor any transfer of right to use such equipment or apparatuses. 91. To constitute a transaction for the transfer of the right to use the goods the transaction must have the following attributes : a. There must be goods available for delivery; b. There must be a consensus ad idem as to the identity of the goods; c. The transferee should have a legal right to use the goods-consequently all legal consequences of such use including any permissions or licenses required therefore should be available to the transferee; d. For the period during which the transferee has such legal right, it has to be the exclusion to the transferor this is the necessary concomitant of the plain language of the ....