TaxTMI 
TaxTMI 
2019 (5) TMI 240
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....mposed penalty of Rs. 34,52,544/- under section 78 (1) of finance act, 1994 and Rs. 10,000/- separately under section 77(1)/77(2) of the Finance Act,1994. Being aggrieved by the Order in Original, the appellant filed appeal before the Commissioner (Appeals) on the merit as well as the limitation, who vide the impugned order upheld the Order in Original and rejected the appeal. Therefore, the present appeal. 2. Shri Saurabh Dixit, Ld. Counsel appearing on behalf of the appellant submits that the appellant have given the cylinders to Aims Industries Ltd. on lease basis under the MOU dated 01/04/2010. According to which the possession and effective control of the cylinders have been transferred to the lessee which is a deemed sale. The appellant are paying VAT on the lease rentals. Since as per the MOU, the right of possession and effective control of the cylinders has been transferred to the lessee, the transaction does not involve services of 'supply of tangible goods for use'. He submits that the issue has been time and again considered by this tribunal in various judgments as cited below: (1) M/s. G.S. Lamba & Sons 2015 (324) E.L.T. 316 (A.P) (2) Gimmco Ltd. 2....
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....f tangible goods' as per the provision of section 65 (105)(zzzzj) of the Finance Act, 1994- "taxable services" means any service provided or to be provided to any person by any other person in relation to supply of tangible goods including machinery equipments and appliances for use without transferring right of possession and effective control of such machinery, equipments and appliances". From the above definition, it is clear that for the supply of tangible goods is for use by other person but without transferring right of possession and effective control, then only such supply shall classify under the taxable services of supply of tangible goods\service. Now it is to be seen that whether the supply of cylinders are with or without transferring right of possession and effective control for which a Memorandum of Association needs to be perused. The relevant clauses of the MOU are reproduced below: 4.1 As per sub clause (ii) of main clause 3, the lessee paying the rent, reserved and observing and performing the several covenants of the MOU on its part contained shall peacefully hold gas cylinders without any disturbance by the lesser or any person. 4.2 As per sub....
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.... Whether a transaction involves transfer of possession and control is a question of facts and is to be decided based on the terms of the contract and other material facts. This could be ascertainable from the fact whether or not VAT is payable or paid. As per the above clarification, transfer of the right to use any goods is leviable to sales tax/VAT as deemed sale of the goods when transfer of right to use involves transfer to both possession and control of the goods to the user of the goods. In the present case also, transfer of right to use is clearly with transfer of both possession and control of goods to the lessee, accordingly the transaction is clearly of deemed sale of goods in terms of Article 366 (29A)(d) of the Constitution of India. Since the entire value of the transaction is liable to Sales Tax as per the above provision the same would not again leviable to Service Tax under the head of "supply of tangible goods'. On the similar issue this Tribunal passed a judgment in the case of Gimmco Ltd. by relying on the Andhra Pradesh High Court judgment in the case of GS Lamba (supra). In Gimmco Ltd. following finding was given: 5. We have carefully considered....
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....c. 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, manufacturer of ready mix concrete (RMC) for providing transportation service for shipping RMC by hiring specially designed Transit Mixers. Under the contracts, the transit mixers are never transferred and effective control over running and using of these vehicles, as well as disciplinary control over the drivers, always remained with petitioners. It was petitioner's responsibility to obtain route permits, to take the ri....
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....e is not liable to service tax w.e.f. 16-5-2008. Now coming to the Revenue's appeal, we find that the ld. Commissioner dropped the demand for the period prior to 16-5-2008 mainly on the ground that the service is of "Supply of tangible goods for use" which came into effect on 16-5-2008, therefore prior to that date the service was not taxable. However, we, in our above findings, held that the service in question is not the service of "Supply of tangible goods for use". In this position the main ground of the ld. Commissioner for dropping of demand does not exist and not relevant. Though the ld. Commissioner in a passing reference mentioned in the impugned order that the service prior to 16-5-2008 does not fall under the "Business Auxiliary Service" but not given the detailed findings. Therefore when the main ground for dropping of demand does not exist. The issue relates to demand prior to the period 16-5-2008 needs reconsideration. 7. As per our above findings, we pass following order : 1. Assessee's Appeal No. ST/654/2012 is allowed. 2. Revenue's Appeal No. ST/712/2011 is allowed by way of remand to the original adjudicating authority passing a fresh or....
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....ee all Gas Cylinder for a period of 12 months commencing from 01/04/2009. The Lessee paying therefore unto the Lessor during the said period, a monthly rent as provided herein below to the Lessor in respect of the Gas Cylinders payable in advance by the 7th day of each and every month during the said term 2. THE LESSEE HEREBY COVENANTS WITH THE LESSOR AS FOLLOWS:- i) The Lessee shall pay to the Lessor rent as per Annexture I, commencing from 01/04/2009. That the Lessee had deposited a sum of Rs. 79,11,479/- (Rupees Seventy Nine Lakh Eleven Thousand Four Hundred Seventy Nine Only), with the Lessor at the time of signing of this MOU, as interest free refundable Security Deposit, which shall be refunded by the Lessor to the Lessee by pay: order/Cheque payable at Vadodara at the time of handing over the actual physical possession of all Gas Cylinders by the Lessee to the Lessor. In case the Lessor fails to refund the security at the time of handing over all the Gas Cylinders by the Lessee, then the Document 2 Lessor shall pay Interest @12% p.a. on net refundable security only for number of days during which the lessor defaults In ....