TaxTMI 
TaxTMI 
2022 (3) TMI 1588
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....our only) [inclusive of Service Tax, Education Cess and Higher Education Cess) on M/s. Orix Auto Infrastructure Services Limited, under Section 73(1) and section 73(2) of the Finance Act, 1994. I drop the demand to the extent of Rs.14,61,69,366/- as discussed in para 49 above. (ii) I also order the recovery of the interest under Section 75 of the Finance Act 1994 at the applicable rate on the duty amount determined in the Order above; (iii) I impose a penalty of Rs.9,74,46,244/ - (Rupees Nine Crore Seventy Four Lakhs Forty Six thousand Two hundred and Forty Four only), on M/s. Orix Auto Infrastructure Services Limited under section 78 read with Section 78B of the Finance Act 1994; (iv) (iv) I do not impose a penalty on M/s. Orix Auto Infrastructure Services Limited under section 76 read with Section 78B of the Finance Act 1994; 57.2 For SCN No. 433/Commr./2012-13 dated 17.09.2012 : (i) I confirm the demand of Service Tax amounting to Rs.3,49,51,204/- (Rupees Three crores Forty Nine lakhs Fifty One thousand Two hundred and Four only) inclusive of Service Tax, Education Cess and Higher Education Cess) on M/s. Orix Auto Infrastructure Servi....
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....ated 21.10.2015: (i) I confirm the demand of Service Tax amounting to Rs.14,20,63,518/- (Rupees Fourteen Crore Twenty lakhs Sixty Three thousand Five hundred and Eighteen only) (inclusive of Service Tax, Education Cess and Higher Education Cess) on M/s. Orix Auto Infrastructure Services Limited under the provisions of Section 7311) and section 73(2) of the Finance Act, 1994; (ii) I also order the recovery of the interest under Section 75 of the Finance Act, 1994 at applicable rate on the duty amount determined in the Order above; (iii) I impose a penalty of Rs.1,42,06,352/ - (Rupees One Crore Forty Two lakhs Six thousand Three hundred Fifty Two only), on M/s. Orix Auto Infrastructure Services Limited under section 76 read with Section 78B of the Finance Act 1994: (iv) (iv) I impose a penalty of Rs.10,000/- (Rupees Ten thousand only) on M/s. Orix Auto Infrastructure Services Limited, under section 77 of the Chapter V of the Finance Act 1994. 57.6 For SCN No. ME/COMMR/ORIX/10/2018-19 dated 12.04.2018 : (i) I confirm the demand of Service Tax amounting to Rs.62,57,77,634/ - (Rupees Sixty Two Crore Fifty Seven lakhs Seventy Seven th....
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....#39;Rent-a-cab service' and not discharging the service tax liability thereon, investigations were undertaken. 2.2 On the scrutiny of the information furnished by the appellants and submissions made by them in the statements recorded revenue alleged: • Appellant entered into MLA with the various parties, as per the said agreement they provided Motor Cab, Maxi Cab, to their customer all over India, also providing fleet management service in respect of the vehicle provided under lease agreement. The Appellant were receiving the lease rental as prescribed in the respective Supplementary Schedule(s) executed for the proposed vehicle(s). • The service provided by the Appellant appeared to be correctly classifiable under the head Rent-a-cab scheme operator's service as defined under Section 65(91) of the Act and taxable service under section 65(105)(o) of the said Act. • They received lease rental charges of Rs.220,21,77,109/- during the period 01.04.2006 to 31.03.2011 which was taxable and the total service tax including Education and Higher Education Cess payable by them was Rs.24,36,15,610/-. Appellant did not pay the service tax for t....
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.... Rs.24,36,15,610/- (including Education Cess and H. Ed. Cess ) for the taxable value of the services rendered under the category of "Rent-a Cab Scheme Operator Service for the period 01.04.2006 to 31.03.2011 should not be demanded and recovered from them under proviso to Section 73(1) of the Act read with Section 68 of the said Act and Rule 6 of the ST Rules and Service Tax (Determination of value) Rules 2006. ii) Interest at the appropriate rate. on the Service Tax not paid on its due date till the date of payment should not be recovered from them under Section 75 of Chapter V of the Act; iii) Penalty should not be imposed upon then under the provisions of Section 76 of the Act for failure to pay Service Tax in accordance with the provisions of Section 68 read with Rule 6 of the ST Rules: iv) Penalty should not be imposed upon them under the provisions of the Section 77 of the Chapter V of the Act for failure to furnish prescribed return as required under Section 70 of the Act read with Rule 7 of ST Rules: v) Penalty should not be imposed upon them under the provisions of Section 78 of Chapter V of the Act for suppressing the value of all the ab....
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....o. 3 of Notification No. 1/2006-ST dated 01.03.2006; that once it was held that the services provided by the Noticee are covered under the category of 'Rent-a-Cab services', the just benefit of abatement could not be denied to the Noticee; that the impugned Notices did not provide the reasons for denying the benefit of abatement to the Noticee." 2.9 Against the Revenue appeal, the appellants have filed cross objections. 3.1 We have heard Shri Darvis Shroff, Advocate for the appellant and Shri Shamboo Nath, Principal Commissioner, Authorized Representative for the Revenue. 3.2 Arguing for the appellant learned counsel submits that: B. BRIEF EXPLANTION FOR EACH OF THE POINTS ABOVE: • The Operating lease transaction of the Appellant involves exploitation of the vehicle purchased specifically for the Lessee as per his instruction for a period covering majority of the vehicle's useful life. Such vehicle is available at the disposal of the Lessee itself during the entire lease period. Therefore, such transactions are within the purview of states for levy of sales lax or VAT and are outside the purview of levy of tax by the Central Government. Th....
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.... case of Bharat Sanchar Nigam Limited Vs Union of India [2006 3 SCC 1] are fully satisfied in the operating lease transaction. A lease transaction does not necessitate the transfer of ownership. The Learned Commissioner has been influenced by the fact that the Appellant continues to retain the ownership and in the process has mixed up the concept of deemed sale with that of a normal sale transaction. The operating lease transactions of the Appellant fall under sub-clause (d) of Article 366(29A) 1.e. transfer of right to use goods which does not pre-condition transfer of ownership. Further, in the case of operating lease transactions of the Appellant, the vehicle given on lease is always physically available with the Lessee, . The Lessee is not required to seek approval or to inform the Appellant for use of the vehicle physically available with him before such use. . Further, Lessee is not required to report to the Appellant on daily or periodical basis particulars with respect to the usage of such vehicle. . Further, there are no restrictions placed as to the timing of use of vehicle, method of operating the vehicle and manner of use of such vehicles. Hence, such vehicle is all the....
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.... of the Appellant even before issue of the first SCN. In such a case, the invocation of extended period of limitation on the ground that the Appellant has suppressed the facts of lease transactions with the intention to evade the payment of service tax is clearly unsustainable. Further, the Appellant has already submitted copy of operating lease agreement, and relevant supporting documents such as invoice etc. to the department. Article 6 of the said agreement contains the details of insurance and maintenance activity of the vehicles undertaken by the Appellant. Therefore, the entire service tax demand including demand on insurance and maintenance is also time barred for the period up to September 2010. Kindly refer Para 27.8 Page 110 of grounds of appeal showing table of demand barred by period of limitation. • Further, It is important to note that VAT paid by the Appellant on operating tease transactions is significantly higher (almost 2.5 times) as compared to service tax applicable on such transactions. The same can be verified from table mentioned para 27.2 page 106 of the Appeal paper-book. Therefore, it shall be incorrect to state that there was any mala fide in....
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....ill, 2014), no penalty shall be imposable on the assessee for any failure referred to in the said provisions, if the assessee proves that there was reasonable cause for the said failure" • Issue involved in the present case is squarely covered by the decision in the case of Arval India Pvt Ltd [2020 (41) GSTL 528 (T-Mum)]. This decision was again followed by the tribunal in case of Arval reported at [2021 (47) ELT 382 (T-Mum)] 3.3 Arguing for the revenue learned authorized representative while re-iterating the findings recorded in the impugned order submits that: • Process of renting a cab under the operating lease is as under : Selection of car by client → Operating Lease Agreement → Purchase Invoice (mentioning client as a Lessee and Appellant as Lessor ) → VAT paid by Lessor → car is registered in the name of Lessee and Lessor, both → delivery of car to Lessee → Car remained under the ownership with Appellant. • After detailed examination of clauses of Operating Lease Agreement it was held in OlO that the vehicle is registered in the name of Lessee for the purpose of Motor Vehicle Act only and also ....
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.... scenario, in the case of a rent-a-cab scheme, as is clear from the very fundamental principle underlying the scheme, it is to give the hirer the freedom to use the vehicle as he pleases, which, undoubtedly, implies that he must have possession and control over the vehicle. This is the fundamental distinction between rent-a-cab and a pure case of hiring. No doubt, the learned counsel for the appellant may be correct in saying that, in the case of rent-a-cab also, there is hiring in the general sense. As we have already noted, the word "hire" is used even in the rent-a-cab scheme. But, what is of fundamental importance and constitutes the distinguishing feature between "rent-a-cab" and "hiring" is that, in the case of "hiring", undoubtedly, the owner of the vehicle retains control and possession; he either drives the vehicle himself or employs somebody else to drive the vehicle; and the customer merely makes use of the vehicle by travelling in the vehicle on the basis of a contract that he will pay the requisite hire charges for the period he uses the vehicle. Unlike the same, in the case of rent-a-cab, as is provided in the Motor Vehicles Act, the person is enabled to take the vehi....
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....has been examined. I am directed to draw your attention to the fact that in any given case involving hiring, leasing or licensing of goods, it is essential to determine whether, in terms of the contract, there is a transfer of the right to use the goods. Further, the Supreme Court in the case of Bharat Sanchar Nigam Limited v. Union of India, reported in 2006 (2) S.T.R. 161 (S.C.), had laid down the following criteria to determine whether a transaction involves transfer of the right to use goods, namely, - a. There must be goods available for 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 to 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 ....
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....to the lessee. It is for a short term period and at the end of the lease period the lessee does not have an option to purchase the asset. The cost of repairs, maintenance and obsolescence rests with the lessor." • Issue involved in the matter is squarely covered by the decision of tribunal in the case of Carzonrent India Pvt Ltd. [2017 (50) STR 172 (T-Del)]. This decision was subsequently followed in the case of Sun National Transport Co. [2020 (34) GSTL 445 (TAll)]. 4.1 We have considered the impugned order along with the submissions made in appeal and during the course of argument. 4.2 The issues that need determination in these appeals can be stated as follows: (i) Whether the operating lease entered by the appellant with their client in respect of the motor vehicles provided by them in terms of MLA, are cases of "deemed sale", as per Article 366 (29A) (d) of the Constitution of India and will be subjected to sales tax/ VAT, or they are covered by the definition of "rent a cab scheme operator" service as defined by Section 65(91) of the Finance Act, 1994 and taxable service under section 65(105)(o) of the said Act. (ii) Whether the service ta....
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....eased to the Lessee, as specified in the Supplementary Schedule(s). (2) "Lease Period" means the period of lease of the Vehicle(s) as specified in Article 3 hereof. (3) "Manufacturer Manual" means and includes the manual(s) issued by the manufacturer of the Vehicle(s) (4) "Payment Schedule" means the schedule as referred in Article 4, which specify the due dates on which lease rentals have to be paid by the "Lessee. (5) "Supplementary Schedule(s)" means the schedule or schedules referred to in Article 15, which specify the details with respect to the Vehicle(s) and other terms and conditions of Lease. (6) "The Vehicle(s)" means the Vehicle(s) and each of the Vehicle(s), specified in the relevant Supplementary Schedule(s) and provided on lease to the Lessee by the Lessor. ARTICLE 2 LEASE OF VEHICLE(S) 2.1 At the request of the Lessee (hereinafter referred to as "the Order'), from time to time, the Lessor may acquire and grant on ST/88843,88844,88845,88846,88848,88851,89088/26 2018 lease, the Vehicle(s), on the terms and conditions herein contained, 2.2 Each Order shall be considered and evaluated by the Less....
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....equired under the provisions of the Act, for the benefit of the Lessor and expressly subject to the absolute ownership rights of the Lessor thereon and the Lessee undertakes and hereby authorizes the Lessor to have the said registration transferred in the name of the Lessor or its nominee on the termination and/or expiry of the Lease and/or requiring possession thereof. 2.7 In the event that the Lessee causes cancellation of, or instructs the Lessor to cancel a Purchase Order/Contract with the supplier of the Vehicle(s) or the Lessee shall refuse or be unable for any reason to accept delivery, the Lessor shall be entitled to terminate the Lease of the aforesaid Vehicle(s) and the Lessee shall pay to the Lessor on demand all costs, charges, expenses, damages incurred by the Lessor arising out of such an action of the Lessee, but for any consequential damages, 2.8 Appropriation of payments (a) Any payments due and payable under or pursuant to this Agreement and made by the Lessee shall be appropriated towards such dues in the following order viz: (i) Interest (Late Payment Charges as specified in Article 4.3 on arrears of Lease Rentals that has bec....
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....ny manner diminish the Lessee's liabilities and obligations hereunder. Repossessions will be done peacefully with due process of law, (ii) Relevant documents with respect to the Vehicle(s), including but not limited to the registration certificate in original and the original Insurance Policy. (iii) Keys (original as well as duplicate) of the Vehicle(s) and accessories of the Vehicle(s) installed by the Lessor, (iv) The Lessor shall issue a receipt to the Lessee or to any person nominated by the Lessee for the delivery of items in sub-clause 3.3 (i), (ii) and (iii) herein above. 3.4 Upon occurrence of event specified in Article 3.2(b) or in Article 3.2(c) above, as the case may be, the Lessee shall in addition to surrender of vehicle(s) as specified in Clause 3.3 above, pay the Early Termination Amount as mentioned in Note 6 of the Supplementary Schedule(s) to the Lessor immediately upon such cessation of Lease Period and termination of Lease Agreement. 3.5 Upon occurrence of event specified in Article 3.2 (d), the Lessee shall pay the Total Loss Penalty Amount as mentioned in Note 7 of the Supplementary Schedule(s) to the Lessor wit....
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....he lease amount/rentals shall be determined by taking into account any increase in the Purchase Price of the Vehicle(s) in the intervening period between the placement of the order for the Vehicle(s) and its eventual delivery by the Lessor to the Lessee 4.6 The Lessee irrevocably agrees that the lease amount rentals will be increased / decreased by any increment / decrement in taxes whether Sales Tax or Value Added Tax, Service Tax, Lease Tax or Excise Duties and /or insurance premium and also by any increase / decrease in levy and taxes, duties and charges by State / Central Government, as the case may be or any other related and consequential charges and taxes levied on this transaction now or hereafter. 4.7 The Lessee agrees that the lease amount / rentals will undergo change due to change(s) in the fiscal or monetary policy, which may affect the Lease Rentals. Consequent to such change, the Lessor shall be entitled at any time and from time to time to give notice to the Lessee of its intention to change the Lease Rentals payable by the Lessee and the Lessee shall be bound to pay Lease Rentals as notified, from time to time. ARTICLE 5 TECHNICAL CONTROL....
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.... Vehicle(s), the Lessor shall provide the replacement Vehicle(s) on chargeable basis. ARTICLE & STANDARD MODELS AND SPECIFICATIONS 8.1 The Vehicle(s) are delivered as standard models in accordance with the Lessee's specifications and as stated in the Supplementary Schedule(s). 8.2 The term "standard models" shall be taken to mean the Vehicle(s) as they are delivered to the Lessee. Any addition of extra accessories and adaptations to the Vehicle(s) shall be permitted in consultation with, and after the prior written consent of the Lessor. ARTICLE 9 INSURANCE 9.1 During the subsistence of this Agreement the Lessee hereby agrees to bear the cost of insuring the vehicle(s) and accordingly shall reimburse the cost towards insurance premium of these vehicles to the Lessor forthwith upon receipt of notice of demand by the Lessee from the Lessor. The Lessor shall comprehensively insure the Vehicle(s), in the joint names of the Lessor and the Lessee with the Lessor's name as the owner and Loss Payee, against all risks, including third party risks. The Lessee shall not do or omit to do or be done or permit or suffer any act which might or ....
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....minate this Agreement in respect of concerned vehicle and to retain any insurance proceeds received by the Lessor in respect thereof. Further, In the event of theft or total / irreparable loss or damage to the Vehicle(s), the Lessee shall forthwith pay the amount mentioned in Article 3.5 to the Lessor 9.8 In the case of the partial accident or the own damaged accident, the lessee shall pay the amount as specified in Note 11 of Supplementary Schedule. ARTICLE 10 LESSEE'S WARRANTIES 10.1 The Lessee warrants that the execution of this Agreement and the use and operation of the Vehicle(s) by the Lessee will not : (a) Contravene the provisions of any law, statute, rule and regulation to which the Lessee is subject and/or the Lessee's Memorandum and Articles of Association. (b) Result in any breach of any agreement or arrangement to which the Lessee is a party. 10.2 The Lessee warrants that it has obtained all consents, licenses, approvals as are necessary for or in connection with the execution, validity and enforceability of this Agreement and for the use and operation of the Vehicle(s) and undertakes to keep them effective ....
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....give notice to the appropriate Regional Transport Authority / Office for effecting transfer of the said Vehicle(s) at the end of the Lease Period or earlier termination of this Agreement. 11.8 To fill in, alter, amend or complete such forms, documents or papers that may be lying with the Lessor duly signed to give full and complete effect thereof 11.9 The Lessee acknowledges, represents, declares, agrees and confirms that: (a) The Lessor has not at any time made nor does it hereby make any representation or warranty whatsoever with respect to the merchantability, quality, condition, durability, suitability or fitness for the purpose, use, operation or performance of the Vehicle(s). (b) The Lessor shall in no way be liable or responsible to the Lessee for any liability, claim, loss, damage, or expense of any kind or nature whatsoever arising from the use of the Vehicle(s). 11.10 The Lessee agrees, confirms and undertakes to indemnify and keep indemnified and saved harmless the Lessor from and against all costs, expenses, damages, claims and losses that the Lessor may incur/ suffer on account of any Governmental statutory action which may ....
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....urred as a result of any action as aforesaid are to be borne by the Lessee and payment shall be made to Lessor upon a written request supported with substantiated proof by the Lessor. The Lessee shall ensure that the Vehicle(s) are only used by persons satisfying the requirements laid down under applicable law and regulations pertaining to such use. 13.3 The Lessee hereby undertakes to abide by existing legislation pertaining to the use of Vehicle(s) when a border is crossed. If, due to non-compliance with the foregoing, the authorities temporarily or permanently take the Vehicle(s) off the road, all the costs, including fines - incurred in attempts to get the Vehicle(s) on the road again, shall be borne by the Lessee. ARTICLE 14 MISCELLANEOUS 14.1 Legal Costs, Taxes, Fines All costs incurred by Lessor in protecting its rights, such as legal and judicial costs in terms hereof and any relevant stamp duty, shall be separately charged to the Lessee, as shall pay any and all taxes currently in force or the levy of any new taxes, of whatever description on the Vehicle(s). 14.2 Notices Unless otherwise provided herein, all notices or ....
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....ons under this Agreement without the prior written consent of the Lessor. The Lessor shall ensure that the rights of the Lessee under this Operating Lease Agreement shall be protected. 16.2 Save as aforesaid, this Agreement shall be binding upon and shall insure for the benefit of the Lessor and its successors in title and assigns and the Lessee and its successors in title. Supplementary Schedule This Supplementary Schedule is a part of the below mentioned Agreement Agreement Name Operating Lease Agreement Agreement No. TMBO0161 Agreement Date 14th August 2008 Lessee Khet-Se Agriproduce India Pvt. Ltd. Lessor ORIX Auto Infrastructure Services Limited (1) Vehicle(s) Description Make (Manufacturer) : Toyota Model & Type : Allis GMT Regn. No. : DL-7. CG4508 Engine Number : 1223146975 Chassis Number : MBJ 532 EE 207604335 (2) Details of Insurance Name of the Insurer (3) Location of Vehicle(s) : Delhi (4) Lease Period : 48 months (5) Lease Rental : Rs 30,0271- per month excluding Taxes (including accessories ) - (6) Ea....
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.... Engine Number : 1223146975 Chassis Number : MBJ 532 EE 207604335 (3) Details of Insurance Name of the Insurer (4) Commencement Date of Lease : The date on which the Acceptance Certificate is signed by the Lessee or its nominee (5) Lease Period : 48 months from Commencement Date of Lease (6) First Payment Date for Rentals : The date on which the Acceptance Certificate is signed by the lessee or its nominee Rent Start Date: 01 - December 2008 (7) Late Payment Charges : 18% p.a (8) Acceptance Certificate Date: (9) Early Termination Amount : As per Note 6 of Supplementary Schedule (10) Total Loss Penalty : As per Note 7 of Supplementary Schedule 4.4 After taking note of the above agreement Commissioner has in the impugned order, analyzed the agreement, and have concluded that the condition at 'd' of the Board Circular by referring to the decision in case BSNL, supra, is not satisfied and hence the transaction in terms of "operating lease cannot be said to be one of deemed sale as per Article 366 (29A) (d) of the Constitution of India. The findings recorded by the Commissioner....
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....icles has not been transferred by the Noticee to their clients. Hence, the condition (d) set out by the Supreme Court is not being fulfilled in the instant case. 43.6 Further, I find in terms of para 2.6, 3.4, 3.5, 3.6, 3.7, 4.7, 6.2, 11.1, 11.4. 11.7. 16 and other clauses of the agreement, whereas the Lessor continue to possess the right of transfer the vehicle from Lessee to any other person, the Lessee has neither been Transferred right to use nor right of possession and effective control or the property in subject cabs. Therefore, the subject transactions do not comply the criteria 'd' and 'e' above and therefore the subject transaction cannot be claimed to be as 'sales' or 'deemed sales' or being excluded from the scope of being a service in terms of Section 66E(f) or as 65B(44). Further, Article 7 of the agreement clearly establishes that the subject transaction is not a sale, deemed sale, but a service as the Noticee is required to provide a replacement of vehicle for possible continuance of service, which does not happen in case of sale/ deemed sale. 44. In this regard, the Noticee have referred to para 6.6.1 of Education Guide ....
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....o use 47. Further, I find in terms of para 2.6, 3.4, 3.5, 3.6, 3.7, 4.7, 6.2, 11.1, 11.4. 11.7. 16 and other clauses of the agreement, whereas the Lessor continue to possess the right of transfer the vehicle from Lessee to any other person, the Lessee has neither been Transferred right to use nor right of possession and effective control or the property in subject cabs. Therefore, the subject transactions do not comply the criteria d' and 'e' above and therefore the subject transaction cannot be claimed to be as 'sales' or 'deemed sales' or being excluded from the scope of being a service in terms of Section 66E(f) or as 65B(44). Further, Article 7 of the agreement clearly establishes that the subject transaction is not a sale, deemed sale, but a service as the Noticee is required to provide a replacement of vehicle for possible continuance of service, which does not happen in case of sale/ deemed sale. 48. Once it is established that the transaction does not involve transfer of right to use, it cannot be excluded from the scope of service as per Section 65E(f) of the Act. Further, when it is also crystal clear by clause 2.6 of the agre....
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....lauses in the agreement that there was no transfer of the right to use. However while doing so his emphasis is more on the transfer in the property of the vehicle(s). In our view the "transfer of right to use" cannot be equated to "transfer in the property of vehicles". The intent of the transaction undertaken needs to be determined in terms of the various clauses of the agreement. The intent of the parties, as per the preamble to the agreement is unequivocally stated in following terms: "The Lessee is desirous of taking on lease, from time to time, Vehicle(s) for its employees' use; The Lessor is willing to provide Vehicle(s) on lease on the terms and conditions hereinafter contained." Now the remaining clauses of the agreement need to be examined in terms of the above. Article 2 of the agreement is in respect of identification and delivery of vehicle(s) along with all the documents and permissions. Article 3 defines the lease period and also the conditions wherein the lease agreement can be terminated. Termination of the lease agreement cannot be equated to encumbrance on the right to use of the said vehicles by the lessee. Commissioner has referred to va....
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....not free to make use of the same for other works or move it out during the period the machinery is in his use. The condition that he will be responsible for the custody of the machinery while the machinery is on the site does not militate against the petitioners' possession and control of the machinery. For these reasons, we are of the opinion that the transaction does not involve transfer of the right to use the machinery in favour of the contractor. As the fundamental requirement of section 5-E is absent, the hire charges collected by the petitioner from the contractor are not exigible to sales tax." In the case of Rashtriya Ispat Nigam, the contractor was obliged to use the machinery only for executing the contract which he had entered into with the petitioner and was not permitted to use the same at any other location. However authorized representative has during the course of arguments not shown a single clause in the agreement which bounded the lessee in this manner. The said decision is clearly distinguishable. 4.7 Learned Authorized representative has referred to the decision of the Hon'ble Uttarakhand High Court to argue that the transaction in the present case is m....
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.... & Customs, Cochin [2011 (23) S.T.R. 433 (S.C.)]. We shall advert to these presently. Further reliance is placed on the decision of the Tribunal in Carzonrent (India) Pvt. Ltd. v. Commissioner of Service Tax, Delhi-I [2017 (50) S.T.R. 172 (Tri. - Del.)] on an identical issue of 'lease rentals' not having been offered for tax along with the issue of leviability of tax on 'fleet management charges' on which the assessee before us has discharged tax liability. We take note that, in this decision, the Tribunal attached premium to the detailed consideration of the attributes of sale, as expounded in Bharat Sanchar Nigam Ltd. v. Union of India [2006 (2) S.T.R. 161 (S.C.)], in the order of the original authority thus '13....... We note that the principle laid down by the Hon'ble Supreme Court in BSNL (supra) will guide while determining the actual nature of transaction between the parties. We are satisfied that the impugned order examined the issue to arrive at the conclusion that the appellant are liable to service tax in respect of the services rendered by them under the category of "rent-a-services".' and, as it appears to be an approval of the logical weaponry deploy....
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.... of the demand after taking into account the submissions made by the appellant. 4.12 On the issue of limitation listed by us at (iii) in para 4.2, we are of the view that issue was except for the first show cause notice which is invoking extended period of limitation all other notices are demand notices which have been issued within the normal period of limitation. In respect of the first notice we find that demand for certain period of time is within normal period of limitation. Taking note of the fact that appellants had been discharging the VAT on the transactions undertaken by them in terms of the operating lease agreements, we are of the view that appellant was under genuine and bonafide belief that they are discharging the tax on the transactions undertaken by them. In view of such a bonafide belief, whereby appellants were discharging the VAT on these transactions which was much higher than the tax that could have been demanded treating these transactions to taxable under the category of rent a cab services, we are of view that extended period of limitation cannot be invoked. 4.13 Since we hold that extended period of limitation cannot be invoked, penalty imposed under....
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....l Excise Rules, 1944 (in short the "Rules') and a decision of this Court in Chairman, SEBI v. Shriram Mutual Fund & Anr. [2006 (5) SCC 361] and was of the view that the basic scheme for imposition of penalty under section 271(1)(c) of IT Act, Section 11AC of the Act and Rule 96ZQ(5) of the Rules is common. According to the Division Bench the correct position in law was laid down in Chairman, SEBI's case (supra) and not in Dilip Shroff's case (supra). Therefore, the matter was referred to a larger Bench." After referring to a number of decisions on interpretation and construction of statutory provisions, in paragraphs 26 and 27 of the decision, the court observed and held as follows : "26. In Union Budget of 1996-97, Section 11AC of the Act was introduced. It has made the position clear that there is no scope for any discretion. In para 136 of the Union Budget reference has been made to the provision stating that the levy of penalty is a mandatory penalty. In the Notes on Clauses also the similar indication has been given. "27. Above being the position, the plea that the Rules 96ZQ and 96ZO have a concept of discretion inbuilt cannot be sustained. Dilip Sh....
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....e for discretion but that is not the case here." 23. The decision in Dharamendra Textile must, therefore, be understood to mean that though the application of Section 11AC would depend upon the existence or otherwise of the conditions expressly stated in the section, once the section is applicable in a case the concerned authority would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under sub-section (2) of Section 11A. That is what Dharamendra Textile decides. 24. It must, however, be made clear that what is stated above in regard to the decision in Dharamendra Textile is only in so far as Section 11AC is concerned. We make no observations (as a matter of fact there is no occasion for it!) with regard to the several other statutory provisions that came up for consideration in that decision." 4.14 In respect of the penalties imposed under Section 76 and 77 and for invocation of the Section 80 of the Finance Act, 1994, we are not inclined to make any pronouncement at this stage and the same needs to be considered by the Commissioner in the remand proceedings while determining the service tax demandable as pe....