TaxTMI 
TaxTMI 
2024 (2) TMI 199
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.... 2.1 Enquiries made revealed that the appellant who 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....
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....riram Sao TVS Ltd [2015 (39) STR 75 (T-Mum)] Prabhalad Majoor Sahakari Sanstha Ltd.[2013 (32) STR 742 (T-Mum)] Shivshakti Enterprises [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 ....
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....e impugned period, Section 65 (105) (zzzzj) of the Act, provided as under: ....... 4.4 Thus, applying the aforesaid statutory provisions to the facts of this case, I find that the appellant had provided the „Supply of Tangible Goods service", during the impugned period. 4.5 ..... 4.6 It is also observed that though appellants 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 th....
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.... hold that this contention by Revenue is fundamentally misconceived, apart from the fact that this is not the consideration recorded in the adjudication order. 35. In our considered view, the charter agreements, both the long-term and short-term, conform to all substantive ingredients as would constitute the transactions as transfer of the right to use goods. Therefore the transactions fall 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 se....
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....eements. Clause 14, which specifies hire charges payable for the use of the tankers stipulates the liability to pay for the use and hire of the tanker at a daily hire rate and pro rata for any part thereof, comprising non-escalating elements. (F) The above Clauses of the agreement cannot be read in isolation but must be considered in the context of the several terms of the agreement taken as a whole and contextually. Clause 3 provides for delivery and 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 inf....
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....and short-term charters) fall within the exclusionary clause of Section 65(105)(zzzzj)], the periodical payments remitted by the assessee in relation to the long term charters of "Disha" and "Raahi" are in relation to the supply of these tangible goods, as a one time event which occurred prior to introduction of this taxable service w.e.f. 16-5-2008 and are therefore not leviable to Service Tax. We hold accordingly. 37. Whether there is no liability to pay Service Tax under the proviso to 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....
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....see further contended that the interpretative principle of noscitur a sociis should be applied to identify the meaning of the expression "during" occurring in association with the expression "location", in the proviso to Rule 3(iii). (vi) Despite the elaborate pleadings by the assessee on this aspect, the adjudicating authority rejected the interpretation proffered by the assessee in a two sentence conclusion set out in para 38.6 of the adjudication order, as follows : "38.6 After going through submissions of Department as well as the 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 co....
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....h for delivery again to the assessee's LNG terminal at Dahej. (xi) The expression "location", on its lexicographic exposition connotes: "to set, fix, or establish in a position, situation or locality; to establish in a place; to settle; to place at a certain location, station or situate; to determine or specify the position or limits". In its adjectival context the expression implies "situated in a particular spot; situation; place or locality". The expression "location" therefore connotes a degree of geo-specific permanence, typically implied for physical spaces. (xii) In 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....
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.... 39. Since we have concluded that the transactions in issue, covered by the long-term charter agreements and the short-term charter agreement in respect of the tankers - "Disha"; "Raahi"; and "Trinity Glory" amount to transfer of the right of use with possession and effective control, by owners in favour of the assessee; that the transactions are therefore covered by the exclusionary clause of Section 65(105)(zzzzj); that the long-term charter agreements (in respect of - "Disha"; and "Raahi") were entered into prior to 15-5-2008; and the tankers were also delivered to the assessee prior to introduction of the new taxable service "STGU"; 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 restric....
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....g 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 risk or loss of transportation, to decide the shifts for the drivers and vehicles, to maintain and upkeep the vehicles in good condition. The petitioners contention was that the contract was for transport service and not the transfer of the right to use the goods. 5.4 The Hon'ble High Court observed that the essential requirement of a transaction for transfer of the right to use goods are : (1) it is not the transfer of the property in goods, but it is right 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 preceden....
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....ant did not have any control over the equipment and the effective control was with the customer. This is because the customer drew plans and issued instructions to the operator for operating the diesel generator sets according to the work requirement; (viii) There was no minimum and maximum number of hours prescribed for operation of the machine and the duration of use of the equipment was entirely at the discretion of the customer; (ix) In some cases the responsibility of maintenance of diesel generator sets was on the appellant; (x) The diesel/fuel and lubricant required to run the diesel generator sets was to be provided by the customers; and (xi) The equipments could not leave or enter the premises of the customers without a pass issued 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 ....