TaxTMI 
TaxTMI 
2024 (3) TMI 455
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....enure of the contract. Such a transaction of supplying tankers to OIL was treated as 'Deemed Sales' under the Assam Value Added Tax Act, 2003 and OIL made payment to the Appellant on a monthly basis after deducting the VAT at source under Section 47(2) of the Assam VAT Act. The VAT so deducted by OIL was deposited with the State Exchequer. As the transaction was considered as 'Deemed Sale' by the Appellant, they have not paid service tax on the said transaction. The Department issued a Show Cause Notice dated 16.09.2014 invoking extended period of limitation, by alleging that the transactions between the Appellant and OIL falls within the ambit of "supply of tangible goods service" as defined under Section 65(105)(zzzzj) of the Finance Act, 1994 and the Appellant has failed to pay service tax for the same. On adjudication, the Ld. adjudicating authority has confirmed the demands of service tax along with interest and penalty. Aggrieved against the impugned order, the Appellant has filed this appeal. 3. The Appellant submits that as per the agreements entered into with OIL, both the possession and effective control over the goods have been passed over to OIL, and th....
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....r delivery; b. There must be a consensus ad idem as to the identity of the goods; c. The transferee should have a legal right to use the goods-consequently all legal consequences of such use including any permissions or licenses required therefor should be available to the transferee; d. For the period during which the transferee has such legal right, it has to be the exclusion to the transferor this is the necessary concomitant of the plain language of the statute - viz. a "transfer of the right to use" and not merely a licence to use the goods; e. Having transferred the right to use the goods during the period for which it is to be transferred, the owner cannot again transfer the same rights to others." 3.3. As per the provisions of the Agreement, the transaction undertaken by them fulfils all the five conditions stated above. Accordingly, the Appellant contended that the transaction amounts to 'Deemed Sale' and VAT has been paid by then under Assam VAT Act. Further, a perusal of the clauses in the Agreement would reveal that the Appellant is only responsible for the operation of the tankers / bowsers, and the entire effective control and right to use vests with ....
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....the Finance Act, 1994. In this regard, the Appellant submits that post 01.07.2012, the provisions of Section 65(105)(zzzzj) cannot be invoked to demand service tax on "supply of tangible goods service"; Such a provision cited by the Ld. Commissioner in the impugned Order is inapplicable on account of advent of the negative list. Neither the Show Cause Notice nor the impugned order has made any reference to the provisions of the negative list regime for confirming the demand post 01.07.2012. Accordingly, it is submitted that the demand for the period post 01.07.2012 is not sustainable on this ground. 3.8. In this regard, the Appellant placed their reliance on the decision of the CESTAT, New Delhi in the case of Commissioner of Central Tax Goods and Service Tax, Delhi East v. M/s. Sanjay Electricals (vice-versa) - 2024 (1) TMI 891 - CESTAT New Delhi wherein CESTAT, New Delhi has held that demand confirmed by citing the non-existent legal provisions cannot be sustained. 4. The Appellant submits that extended period of limitation cannot be invoked in the instant case since the Appellant was under the bona fide belief that no service tax is payable since the instant transaction in dis....
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....mount in their Balance Sheet cannot prove that the department has the knowledge of service provided by the Noticee." However, such an observation by the Ld. Commissioner goes against the settled position of law that no suppression can be alleged when a transaction is recorded in the Balance Sheet. Reliance in this regard is placed on the decision of Black Box Ltd v. Commissioner of C. Ex. & S.T. Ahmedabad III - 2023 (73) G.S.T.L. 381 (Tri. - Ahmd.) wherein it was held that when the assessee has disclosed the transaction in the balance sheet, no suppression or mis-declaration can be attributed to invoke extended period of limitation. 4.6. In view of the above submissions, the Appellant contended that the impugned order confirming the demands of service tax along with interest and penalty is not sustainable and prayed for setting aside the same. 5. The Ld. Authorized Representative appearing on behalf of the respondent submits that as per certain clauses in the agreement, the possession and control of the bowsers/tankers lies with the Appellant and hence the same amounts to 'supply of tangible goods service' liable to service tax under Section 65(105)(zzzzj) of the Finance ....
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....osal 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 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." 7.2. It is a fact on record that the Appellant has considered the transaction as amounts to 'Deemed Sale' and paid VAT under Assam VAT Act. As per the clarification issued by the Circular mentioned above, if VAT / sales tax is payable on the transaction as deemed sale of goods then the supply of tangible goods is not covered under the scope of the "supply of tangible goods service". We observe that payment VAT is one of the conditions prescribed to ascertain whether a transaction is liable to service tax under the category of 'supply of tangible goods'. However, whether ....
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....g the demand considering exemption notification which also did not exist during the relevant period. Not only were the wrong provisions invoked in the SCN, but the demands were confirmed under them in the impugned order which shows complete non-application of mind. The provisions were not only wrong but were non-existent during the relevant period. We, therefore, answer this question in favour of the assessee and against the Revenue and hold that the demand confirmed in the non-existent legal provisions cannot be sustained." ( Emphasis supplied ) 7.5. In view of the decisions cited and the discussions above, we hold that the demand for the period 01.07.2012 to March 2014 is liable to be set aside. 8. Regarding invocation of extended period of limitation, we observe that the Appellant was under the bona fide belief that no service tax is payable since the instant transaction in dispute constitutes a 'deemed sales' for which VAT was already paid. In the case of Carzonrent (India) Pvt. Ltd. v. Commissioner of Service Tax, Delhi - I - 2017 (50) S.T.R. 172 (Tri. - Del.), CESTAT, New Delhi has held that when there is an element of dispute and ambiguity whether a transaction i....
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....the Original Authority. However, the demand shall be restricted to the normal period and the penalty under Section 78 is not sustainable. The benefit of abatement in terms of Notification Nos. 9/2004-S.T. and 1/2006-S.T. shall be allowed on production and verification of supporting documents for fulfilment of the conditions stipulated therein. The appeal is disposed of in the above terms. 8.1 We find that CESTAT Chandigarh in the case of Sant Roadlines v. Commr. of C.Ex. & S.T., Panchkula - 2020 (43) G.S.T.L. 206 (Tri. - Chan.), has held that extended period of limitation is not invokable when the assessee was under the bona fide belief that no service tax is payable under the category "supply of tangible goods" when the agreements clearly show such bona fide belief on the part the assessee. Further, we observe that the Appellant has disclosed all the transaction details in the balance sheet and suppression of fact with intention to evade payment of service tax has not been established in this case. Accordingly, we hold that the demand of service tax beyond the normal period of limitation is not sustainable. 8.2. We observe that in the impugned order demand has been confirmed for....