TaxTMI 
TaxTMI 
2019 (2) TMI 262
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....ent of Education, Government of NCT, Delhi. The revenue entertained a view that the appellant had provided services under the category of 'Supply of Tangible Goods' in terms of Section 65(105)(zzzzj) of Finance Act, 1994 and were held liable to pay service tax. The proceedings initiated vide show cause notice C no. V(H) Adj-I/ST/11/2012/729 dated 23.5.2012 culminated in the impugned order. The Adjudicating Authority concluded that the appellant was providing services under the category of 'Supply of Tangible Goods' and were liable to pay service tax. Service tax liability of Rs. 1,24,52,639/- was confirmed against the appellant. Equal penalty was imposed under Section 78 of Finance Act, 1994. Penalty was also imposed under Section 77 of Act ibid. 2. The learned Counsel for the appellant contested the impugned order on the ground that even though the ownership of computers still rested with the appellant, the legal right of possession and effective control was actually handed over to the Lessee. Therefore, said activity of supply and installation of the computers and accessories along with legal right of possession and effective control to Lessee was not covered under the category ....
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....remove at their discretion/will any of the assets supplied and installed by the appellant, without the concurrence of the unit in-charges. On the other hand, the Lessee could direct the appellant to re-assign equipment from one place to another. As per clause 12(e), the Director of Education, Government of Delhi, could direct the appellant to transfer the computers and other hardware along with IT Assistant for implementation of the program from one unit to another site. Besides, the appellant has submitted a number of certificates issued by Principals and Vice-Principals of government schools in support of their claim that the hardware and computers supplied by the appellant was leased out with the right to possession and effective control. This way, the appellant is not permitted to lien, mortgage etc. any of the computers whose physical possession has already been given to Lessee. However, schools do have a right to move computers at will. Thus, Lessee had deep and pervasive control over the computers installed within their premises.We are of the opinion that the ownership having remained vested in the name of the appellant certainly cannot lead to drawing inference that the eff....
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....pose [Assistant Commissioner, Gadag Sub-Division, Gadag v. MathapathiBasavannewwa, 1995 (6) SCC 355]. Not only that, if the plain construction leads to anomaly and absurdity, the Court having regard to the hardship and consequences that flow from such a provision can even explain the true intention of the legislation. Having observed general principles applicable to statutory interpretation, it is now time to consider rules of interpretation with respect to taxation." 9. In view of the facts stated above coupled with the ratio of the judgment cited supra it would be inappropriate that the concept of import of "transfer of the ownership of the equipment to the Lessee to ensure that possession and effective control of the equipment has been passed on to the Lessee" into the definition of the category of services, viz., 'Supply of Tangible Goods'.The thrust of statute under reference is on the right of transfer to use the goods. During such handovers, ownership rights may not be transferred to the transferee, as in the case of outright sale of goods. But the important fact is that the possession and effective control of the equipment has been passed on to the Lessee.Since ownership c....
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....ht of possession and effective control of such computers. This clause in the contract cannot be considered to be in derogation of the taxation, which clearly amounts to transfer of right to use computers in favor of Lessee.We find that in the present case, the exclusion in the tax entry shall operate as the Lessee enjoyed full control on method, manner and time of using the computers. No restriction in respect of any of these factors was ever placed by the appellant. Immediate impression of any third party was that the computers belonged to the schools where these had been installed by the appellant. During the lease period, the appellant never used these computers for their own official or personal work/use with respect to taking outputs or providing any inputs except the standard software tools required to operate the computers.These computers were exclusively used by schools and Department of Education, Government of Delhi and not by the appellant. In fact, appellant had no control over the manner or duration of such usage of computers by schools or Director of Education. Possession and ownership need not go together always 12. Delivery of physical possession of computers is a ....