TaxTMI 
TaxTMI 
2023 (8) TMI 1237
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....dtd. 08.12.2015 2013-12014 75,64,558/-, Interest and Penalty ST/10320/2021 OIO No. SRT/DIV-IV/ADJ-51/2018 dtd. 28.02.2018 OIA No. CCESA-SRT(Appeal) PS-182/2020-21 dtd. 26.02.2021 2014-2015 24,59,150/-, Interest and Penalty Since the issue involved in all these appeals is common, we are taking up all these appeals for common disposal. 1.2 The common facts of four of these appeal are that the appellant is engaged in the providing cargo handling services, port handling services, business auxiliary services etc. During the course of audit, it was noticed that the appellant has shown in the balance sheet for the period 2010-11 to 2011-12, chartered hiring income where no service tax has been paid. On being asked the reason for nonpayment of service tax, the appellant stated that they have not paid service tax where the control and possession has been given to the charterer. Further appellant stated that they had provided the vehicles and vessels on bare charter to the charterer and as per the terms of the hiring the equipment were under the control and possession of the charterer/ hirer. Auditors observed that appellant was engaged in providing servi....
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.... that where there is a transfer of possession and control to the service recipient, then it is a deemed sale and not liable to service tax. It was further clarified that payment of VAT is the relevant criterion that establish transfer of effective control and possession in a transaction. Since the transaction in its case suffered the element of VAT, no, service tax is payable thereon. 2.3 He also submits that in terms of the bareboat charter agreement that appellant has entered with the charterer /transferee in the BIMCO format, it does not have effective control the right of possession of the vessels given to hire. The complete custody of the vessels will be with the lessee/ charterer/ transferee during the tenure of the lease and the lessee will be wholly liable for all the damages caused to vessels. The Charterer is required to confirm with all the rules and regulation associated with the operating of the vessels. The charterer is required to maintain the vessels in proper conditions and charterer shall be responsible for the maintenance and repairs of the vessels, and shall bear the expenses of the master, crew, driver, fuel and any other expenses that may accrue during the ....
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.... 2011-12 and hence, transaction is liable for service tax under Supply of Tangible Goods. The invoices relating to 2010-2011 but accounted during 2011-12 since the same were issued by the supplier of crew during 2011-12. He produced the copies of invoices. 2.7 He also submits that from the clauses of the agreement for supply of vehicles and vessels, it clearly comes out that insurance, expenses towards repair and maintenance of the vehicle/vessels is borne by the lessee and not the appellant. 2.8 He further submits that the finding of impugned order regarding the trading restrictions, that under the Maritime Regulation in India the vessel is assigned as trading limits. Also, the Insurance companies specify the area only up to which they will cover the maritime claims. The stipulation of trading restriction is also reckoned in the classification issued by the Ministry of Finance vide F.No. 354/63/2008 as 18.06.2008. Therefore, restrictions under the law with regard to navigating the vessels in war zones, carrying explosives etc., or allowing movement only on west coast etc. cannot be reason to hold that there is no transfer of effective control and possession. 2.9 He also s....
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.... with reference to the "service of supply of tangible goods for use". Para 4.4. of the said circular is given below :- "4.4 Supply of tangible goods for use : 4.4.1 Transfer of the right to use any goods is leviable to Sales Tax/VAT as deemed sale of goods [Article 366(29A)(d) of the Constitution of India]. Transfer of right to use involves transfer of both possession and control of the goods to the user of the goods. 4.4.2 Excavators, wheel loaders, dump trucks, crawler carriers, compaction equipment, cranes, etc., offshore construction vessels & barges, geo-technical vessels, tug and barge flotillas, rigs and high value machineries are supplied for use, with no legal right of possession and effective control. 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. 4.4.3 Proposal is to levy Service Tax on such services provided in relation to supply of tangible goods, including machinery, equipment and appliances, for use, with no legal right of possession or effective control. Supply of tangible goods for use and leviable ....
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.... their use and operation of the vessel under the this charter, including annual flag State fees and any foreign general municipality and/or state taxes. The master officers and crew of the vessel shall be the servants of the charterers for all purpose whatsoever even if for any reason appointment by the owners. Charterers shall comply with the regulations regarding officers and crew in force in the country of the vessels flag or any other applicable law." 4.5 The above clause of the Charter states that the vessel shall during the charter period be in full possession and at the absolute control for all purposes of the charterers and under their complete control in every respect. The charterers shall maintain the vessel. In view of it is clear that during the charter period of vessels the right of possession of vessels and effective control have been transferred to service recipient, therefore the service does not fall under the "Supply of Tangible Goods Service". 4.6 We also gone through the vehicle hire agreement entered between Appellant and M/s Eassr Steel India Ltd. The following fact comes outs from the clause 2 of the said agreement/ contracts- (1) M/s ESIL is r....