TaxTMI 
TaxTMI 
TaxTMI 
2023 (9) TMI 868
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....mporary period. The responsibility to provide infrastructure, installation, cabling, fitting etc. was upon the client. The client was responsible for commissioning and installation of DG Set in their own plant/ premises. The client was to make proper arrangement for safe custody and space for DG Set. The client was to adjust power requirements and utilize power generated by DG Set. It is the client who was to decide the operating environment and level of activity of DG Set according to its requirements. The client only was to bear cost of consumables such as diesel according to its requirement. The DG Set was permanently attached to the premises of the client by losing its mobility for the period of agreement. The client was to hand over possession and custody of DG Set back to the appellant upon termination of the agreement which signifies that during the tenure of agreement, the possession and custody of the DG Set was with the client. As per this undisputed fact, the appellant has lawfully transferred the rights under the agreement which inter alia includes right of use, right of possession and effective control unto the client and client accepted same until termination of the a....
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....ort of his submission, he placed reliance on the following decisions and Circulars: Circular No. 334/1/2008-TRU dated 29.02.2008 Circular No. 198/8/2016-ST dated 17.08.2016 Quippo Energy Ltd. A/11873-11875/2022 CST vs UFO Moviez India Ltd. 2022-VIL-07-ST-ST Subhash Light House 2022-VIL-106-CESTAT-CEST-ST Express Engineers & Spares Pvt Ltd. 2022(1) TMI 564-CESTAT You Broadband & Cable India Ltd. 2020 (2) TMI 187 - CESTAT Amd GIMMCO Ltd 2017 (48) STR 476 (T) Imagic Creative Pvt ltd. 2008 (9) STR 337 (SC) 3. Shri R.K. Agarwal and Shri Anup Kumar Mudvel learned Superintendents appearing on behalf of the Revenue reiterates the findings of the impugned order. 4. We have carefully considered the submissions made by both the sides and perused the records. We find that the fact is not under dispute that the appellant have provided the DG Set on rental basis under an agreement to their clients. The issue to be decided is that whether such supply of DG Set on rent is classifiable under "Supply of Tangible Goods Service" defined in clause 65(105)(zzzzj) of Finance Act 1994. To arrive at a conclusion, it is important to go through the terms and conditions of the agreement. A....
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....tenance is under the obligation of the appellant, the right to use, possession and effective control has not been transferred to their client, therefore, the supply of tangible goods clearly falls under the definition of "Supply of Tangible Goods Service" as per the clause 65(105)(zzzzj) of the Finance Act. We find that merely because the appellant have provided the operator and undertaken the repair and maintenance, the status that the right to use, possession and effective control has been transferred to the client is not affected. The providing of operator and repair and maintenance is undertaken by the appellant only because of their technical expertise. However the use of the generator set accordingly to the requirement of the client is completely the prerogative of the client. Therefore, in the given arrangement of supply of DG Set to the client, we are of the view that the right to use, possession and effective control has been clearly transferred to the client. Therefore, such supply does not fall under the definition of "Supply of Tangible Goods Service" provided under clause 65(105)(zzzzj) of Finance Act which for the ease of reference is reproduced below: "To any perso....
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....red under the scope of the proposed service. 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." From the above clarification, it is unambiguous that when on supply of tangible goods, the sales tax is payable or paid the same transaction will not be subject to payment of service tax, for the reason that as per Article 366 (29A) of Constitution of India, the supply of tangible goods is considered as deemed sale and any sale transaction will not be a domain of service. The identical issue has been considered by this Tribunal in the case of Quippo Energy Private Limited vide Order No. 11873-11875 of 2022 wherein following order was passed: "4. Heard both the sides and perused the records. To appreciate the rival contentions, it would be appropriate to first reproduce Section 65(105)(zzzzj) of the Act, which defines the Taxable Service -"Supply of Tangible Goods" which is as follows :- "Section 65(105)(zzzj) - "Taxable Service" means any service provided or to be provided to any per....
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.... CCR have to be taken by the Customers, the lessee shall ensure the safety of the plant in a manner similar to its own plant. Customers have to provide fuel, Jacket water & feed water, the site and other facilities. Further, as per clauses of lease agreements, the customers will also indemnify the Lessor against the loss or damage arising to or in connection with plant for the reason other than Lessor"s personnel. We also find that the clause 8.6 of agreement between the Appellant and Shah Pulp & Paper Mills Ltd. (Customer) provide as under : - " 8.6 By virtue of the agreement, the lessee shall be considered to have possession of the plant and shall have the right to use the plant for the purpose for which it is leased to him." In view of such conditions, the effective control of the gas genset are purely in the hands of customers of the Appellant, as the customers is at his liberty to use the equipments hired by him. It is seen from the agreements that there is no dispute as to the fact that the goods are in the possession of the lessee and is being used by him for the intended purpose without any interference or hurdle from the appellant. On going through the clauses of agree....
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....cating authority has held that since as per contract the equipment will remain sole property of equipment provider and skilled manpower supplied by the Appellant are responsible for maintenance operations of gas genset/plant, it is clear that the legal right and effective controls rests with the appellant. We find that except the above findings the Commissioner has not dwelled upon any of the submission and facts made by the appellant. The terms and condition of the agreement are its essence and is deciding factor for determination of nature of contract/agreement. As per agreement the equipment is delivered to the customers ; in terms of Clauses ofagreements as discussed above customers are required to get all permissions for installation of equipments; Clause of agreements also provide that customers shall be responsible for all injuries, losses and damages cause to the equipment and shall also indemnify the appellant against any loss or damage arising to or in connection with the; Further the skilled manpower is not supplied by the Appellant under the Lease agreement. There is sperate service agreement entered between the Appellant and customer under which various services are pr....
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....e Article 366(29A) (d) of the constitution, transfer of the right to use any goods for any purpose, whether or not for a specified period, for cash, deferred payment or other valuable consideration, has to be considered as deemed sale or purchase of goods. It is clear that a tax on the sale or purchase of goods includes a tax for transfer of right to use goods as that is deemed sale. 4.8 It is observed that the appellant have been paying VAT on such leasing of equipments since year 2007-08. We also find that DOF No. 334/1/2008- TRU, dated 29-2-2008 Circular in Para 4.4 also states that "Supply of tangiblegoods for use and leviable to VAT/Sales tax as deemed sale of goods, is not covered under the scope of the proposed service. 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". It is not in dispute that the appellant were paying VAT since 2007-08 and the services of "supply of tangiblegoods" came into service tax net later. The subject DOF was issued before the enactment and intende....
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.... equipments to some of the theaters. The appellant in order to fulfil contract with the distributors are inserting smart cards to monitor the number of shows in such DCE. They are also collecting registration fee from theaters for conducting feasibility study which is reimbursement of expenses. The demand against them is on lease of DCE equipments given to the theatre owners on the ground that since the effective control and possession of such equipments has remained with the appellant, hence the services are of "supply of tangible goods for use". We find that the adjudicating authority has held that since as per contract the equipment will remain sole property of equipment provider and he shall bear the cost of normal wear and tear and repairs it is clear that the legal right and effective controls rests with the appellant. We find that except the above findings the Commissioner has not dwelled upon any of the submission and facts made by the appellant. The terms and condition of the agreement are its essence and is deciding factor for determination of nature of contract/agreement. The findings of the impugned order nowhere leads to the conclusion on the basis of this vital aspect....
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....s concerned the Appellant were owners of the equipments and the nature of leasing agreement does not change for the reason that the insurance was done by the appellant. For bringing any service under the category of "supply of tangible goods service" in terms of Section 65(105)(zzzj) it is imperative to see that such service is in respect of services towards supply of tangible goods for use "without transferring right of possession and effective control". In the present case once the DCE were transferred to theatre owner the appellant had no control over running of such equipments which are to be operated by the persons employed/deputed by the theatre owner. The theatre owner had contractual control over such equipments which was in their possession. All these factors are to be taken into consideration while determining the nature of service. It is observed that the appellant has been paying VAT on such leasing of DCE since year" 2006. Further the fact remains that in 2008 they approached the authority for determination of disputed question which ruled that the services are liable for VAT. The adjudicating authority has not given any findings on this aspect when brought before him.....
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....ppellant obtained DDQ (Determination of Disputed Question) dated 26-6-2008 from Commissioner of Sales Tax, who held that lease rental is liable for VAT. The appellant accordingly was discharging the VAT liability even before the taxability on "Supply of Tangible goods for use". With the above undisputed facts. We are of the clear view that there is no suppression of facts with intent to evade payment of Service Tax on lease rentals on DCE, on the part of the appellant. Therefore we hold that the demand for extended period is clearly time-barred. 6.3 As regard demand of service tax on merit for the normal period, we observed in our above discussions that various vital facts and submissions of the appellant were not properly verified by the adjudicating authority, therefore we remand the case relating to lease rentals and registration fees for the normal period with direction to adjudicating authority to verify whether the contentions made by the appellants are correct with regard to the theatre owners having freedom to choose movie, number of shows, timing of shows, to determine whether to play a movie or not and have operational control of the equipment through their own men or ....
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.... service of sale of space for advertisement which was provided through the said DCE. It therefore leaves no doubt that credit on capital goods is available even if they are removed outside from the premises of the appellant for providing output service. We are therefore of the view that there is no ground for denial of Cenvat credit on capital goods to the appellant. 6.5 We also find that while invoking extended period for demand of Cenvat credit on DCE, in Para 33 of the Order-in-Original, adjudicating authority has admitted that the appellants have disclosed Cenvat credit on capital goods in the return, despite recording this, he has given adverse finding on limitation. Considering the fact that appellants have been paying VAT from 2006 that too at higher rate than the service tax rate, even before SOTGU Services became taxable service, no mala fide can be attributed to invoke extended period for denying Cenvat credit. Placing reliance on Dalmia Cements case of the Madras High Court and in view of our above observations, we are of the view that Cenvat credit on Digital Cinema Equipment has to be allowed, independent of taxability on lease Rentals of DCE. Accordingly we set asi....