TaxTMI 
TaxTMI 
2024 (2) TMI 199
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....o is registered for providing "Mining service" classifiable under Section 65 (105) (zzzy) of the Finance Act, 1994 had also provided "Supply of Tangible Goods Service" classifiable under the Section 65 (105) (zzzzj) of the Act, during the period from 2008-09 to 2010-11, without obtaining registration for the same and without paying service tax (including cesses) of Rs.8,36,086/-. 2.2 A show cause notice dated 17.10.2013 was issued to them asking them to show cause as to why: (i) An amount of service tax Rs 8,36,086/- (Service Tax Rs 8,11,735/- + Ed Cess 16,234/- + S H Ed Cess Rs 8,117/-) (Total Rupees Eight Lakh thirty Six Thousand Eighty Six only) being service tax short paid during the period 2008-09 to 2010-11 against the taxable service of "Supply of Tangible Goods" service should not be demanded from them under proviso to sub-section 73 of the Finance Act, 1994 along with appropriate interest under Section 75 of the Act. (ii) penalty should not be imposed upon them under section 77 (1) (a) of the act in contravention of the provisions of Section 69 of the Act, read with Rule 4, 5 of the Rules. (iii) penalty should not be imposed upon them under section 78 of the act for....
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.... [2016 (41) STR 648 (T-Mum)] Merely on the ground of maintenance, repair and operators it cannot be said the service was falling under this category. G S Lamba & Sons [2015 (324) ELT 316 (AP)] GIMMCO Ltd. [2017 (48) STR 476 (T-Mum)] Demand notice issued invoking extended period of limitation is bad in the present facts of case and the decisions as follows: Future Focus Infotech Pvt Ltd. [[2018 (18) GSTL 441 (T-Chen)] Aditya College of Competitive Exam [2009 (16) STR 154 (T-Bang)] V & R Auto Guages (P) Ltd. [2003 (160) ELT 828 (T-Del)] Jaipur Jewellery Show [2017 (49) STR 313 (T-Del)] ACE creative LKearning Pvt Ltd. [2022 (63) GSTL 337 (T-del)] ITW Signode (India) Ltd. [2015 (322) ELT 699 (AP)] Vedanta Aluminium Ltd [2016 (331) ELT 408 (Cal)] Northern Operating Systems Pvt Ltd. [2022 (61) GSTL 129 (SC)] Shree Rajasthan Syntex ltd. [2015 (318) ELT 626 (SC)] Dalveer Singh [2008 (9) STR 491 (T-Del)] Jain Carrying Corporation [2019 (24) GSTL 376 (T-Del)] Natraj Stationary Products (P) Ltd [2017 (348) ELT 568 (t-Chand)] Vaspar Concepts (P) Ltd [2006 (199) ELT 711 (T-Bang)] Jer Ring Gears Pvt Ltd. [2005 (186) ELT 73 (T-Bang)] Anand Metal Industries [2....
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.... have relied upon a number of case laws, they have not given any justification as to how these decisions are applicable to the facts of their case, especially when circumstances, transactions, events of each case, are required to be considered, analyzed and weighed against the circumstances et al to be the same in the referred cases. I also find that the Hon'ble Supreme Court in the case of Punjab National Bank vs R L Vaid 2004 (172) ELT 24 9SC), has held at Para 5, as under: "5. We find that the High Court has merely referred to the decision in R.K. Jain's case (supra) without even indicating as to applicability of the said decision and as to how it has any relevance to the facts of the case. It would have been proper for the High Court to indicate the reasons and also to spell out clearly as to the applicability of the decision to the facts of the case. There is always peril in treating the words of a judgment as though they are words in a Legislative enactment and it is to be remembered that judicial utterances are made in the setting of the facts of a particular case. Circumstantial flexibility, one additional or different fact may make a difference between conclusions in two....
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....within the exclusionary clause of Section 65(105)(zzzzj) of the Act and consequently outside the purview of the taxable STGU service. The transactions are therefore immune to the levy and collection of Service Tax. We hold accordingly. 36. Whether transactions under long term charter agreement are immune to levy of Service Tax since the taxable event occurred prior to 16-5-2008 : (A) On the uncontested facts, the agreements for hire for use of the vessels (tankers), "Disha" and "Raahi" were entered into on 31-3-2001 and the tankers delivered to the assessee on 9-1-2004 and 16-12-2004 respectively. The short term charter agreement for the tanker "Trinity Glory" was entered into on 30-4-2009 and the delivery was on 15-5-2009. (B) STGU was enacted as a taxable service w.e.f. 16-5-2008 by introduction of Section 65(105)(zzzzj) in the Act. According to the assessee, since entering into the long-term charter agreements and the supply (delivery) of "Disha" and "Raahi" was earlier to introduction of this taxable service, no Service Tax can be assessed, levied or collected on the consideration (hire charges) remitted by the assessee to the owner of these tankers, notwithstanding tha....
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.... redelivery and clause 3.6 stipulates that redelivery of the tanker would be on termination of the charter, at the last discharge port or at a port nominated by the charterers (3 months) before the date of redelivery. On a true and fair construction of the several provisions of the long term charter agreements, including in particular clause 15, the conclusion is inescapable that the taxable event occurs on the entering into the agreement followed by delivery of the tankers and not on day-to-day basis as contended by the Revenue. The stipulation as to payment of daily hire charges is only a commercial term relating to computation of the hire charges payable by the assessee to the owners. These clauses do not legitimize the inference that supply occurs on each day the tankers are used. (G) The Supreme Court in 20th Century Finance Corporation and Anr. (supra) clarifies that where goods are available, the transfer of the right to use takes place when the contract in respect thereof is executed; since the contract is executed, the right is vested in the lessee; and the situs of the taxable event of such tax (Sales Tax or VAT, as the case may be) would be the transfer, which legally....
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.... Rule 3(3) of the Import of Service Rules : (i) Paragraphs 19 and 34 (sub-paras 54 to 70) of the adjudication order extract contentions of the assessee in this behalf. To summarise, the assessee asserted before the adjudication authority that its liability to the charge of tax under the reverse charge mechanism (Section 66A) must be considered in the context of the 2006 Rules as well. The proviso to Rule 3(iii) of the Rules, is a specific provision applicable to the taxable service specified and defined in Section 65(105)(zzzzj); and reads : "Provided that where the taxable service referred to in sub-clause (zzzzj) of clause (105) of Section 65 of the Act is received by a recipient located in India, then such taxable service shall be treated as taxable service provided from outside India and received in India subject to the condition that the tangible goods supplied for use are located in India during the period of use of such tangible goods by such recipient". According to the assessee, on a true and fair construction of the language of the proviso, where the tangible goods supplied for use cannot be said to be located in India during the period of their use by the recipie....
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.... noticee I find that there is no reason to interpret the word „during' any differently from what it accurately means in the given context. As has been given in Rule 3(ii) of the Import of Service Rules that even if a service is partly performed in India, it would be treated as having been performed in India. Hence I hold that as the service is provided at some point of time in India it is enough to be covered in the word „during' as it appears in proviso to Notification No. 11/2006-S.T., dated 19-4-2006." (vii) The 2006 Rules were issued (by Notification No. 11/2006-S.T., dated 19-4-2006), in exercise of powers conferred by Sections 93 and 94 read with Section 66A of the Act. Rule 3 of these rules sets out provisions specifying in the circumstances in which taxable services provided from outside India and received in India fall would amount to a taxable service, under the Act. Rule 3(i) enumerates specified categories of taxable services, provided or to be provided in relation to immovable property situated in India. Rule 3(ii) specifies taxable services, (other than those specified in Rule 3(i); and the first proviso thereto enjoins that where such taxable services ....
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....n the circumstances, the phrase in Rule 3(iii); the tangible goods supplied for use are located in India during the period of use of such tangible goods by the recipient, can only mean that the tangible goods must be located during the entirety of the period of use of such tangible goods by the recipient, in India. (xiii) The separate and distinct treatment specified for the taxable STGU service, in the proviso to Rule 3(iii) of the 2006 Rules, in our considered view clearly signals the statutory intent that tangible goods, for falling within the fold of the reverse charge mechanism, must when supplied for use be located in India during the entirety of the period of their use, by the recipient. The contrary conclusion by the adjudicating authority in para 38.6 of the order cannot therefore be sustained. 38. Legality of imposition of penalties under Sections 76 to 78 : (i) As indicated in the factual narrative set out in paragraphs 6 and 7 (supra), penalties under Sections 76 to 78 of the Act were imposed on the assessee, either by the adjudication order or subsequent corrigenda issued. The assessee challenges imposition of penalties, contending that penalties are liable....
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....TGU"; the taxable event of supply of tangible goods for uses has taken place prior to introduction of the taxable service; and that though hire charges for the actual use were remitted subsequently and periodically, no Service Tax is leviable." 4.5 In case of Gimmco Ltd., Mumbai bench has held as follows : "5.2 Revenue's contention is based on the clauses in the agreement relating to restrictions of use by the lessee, provision of skilled operator by the lessor and maintenance and repairs of the equipment by the lessor. Merely because restrictions are placed on the lessee, it can not be said that there is no right to use by the lessee. Such a view of the revenue does not appear to be tenable when we read carefully the provisions of the agreement. Cl. 13 of the agreement provides for Hirer's Covenants. As per Cl. 13.1, the hirer will use the equipment only for the purpose it is hired and shall not misuse or abuse the equipment. Similarly in Cl. 13.3, it is provided that the hirer will ensure the safe custody of the equipment by providing necessary security, parking bay, etc., and will be responsible for any loss or damage or destruction. Cl. 13.5 provides that the hirer shall be....
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....t to use property in goods; (2) Article 366(29A)(d) read with the latter part of the Clause (29A) which uses the words, "and such transfer, delivery or supply" would show that the tax is not on the delivery of the goods used, but on the transfer of the right to use goods regardless of when or whether the goods are delivered for use subject to the condition that the goods should be in existence for use; (3) in the transaction for the transfer of the right to use goods, delivery of goods is not condition precedent, but the delivery may be one of the elements of the transaction; (4) the effective or general control does not mean always physical control and even if the manner, method, modalities and the time of the use of goods is decided by the lessee or the customer, it would be under the effective or general control over the goods; (5) the approvals, concessions, licences and permits in relation to goods would also be available to user of the goods, even if such licences or permits are in the name of transferor of the goods; and (6) during the period of contract exclusive right to use goods along with permits, licences, etc., vests with the lessee. Applying these pr....
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.... by the customers. 26. Thus, the transaction between the appellant and the customers would qualify as a transfer of right to use goods with the control and possession over the diesel generator sets passing on to the customers. 34. From the decisions referred to above, it clearly transpires that; (i) Whether there is a transfer of right to use or not is a question of fact which has to determine in each case having regard to the terms of the contract under which there is a transfer of right to use; (ii) If with the transfer of the right to use, possession and effective control is also transferred, the transaction falls outside the preview of service tax liability. However, when the effective control and possession is not transferred and it continues to remain with the person who has given the machinery on hire, it would not be open to the authority to levy service tax; (iii) Mere fact that the persons are employed by the owner does not in any manner deter from the fact that the transaction constitutes a transfer of the right to use the tangible goods with possession and effective control; and (iv) The fact that after the operation is over on any given day and the ta....